Southern Copper (PCU)

Minority interest

Minority interest in 2008 was $7.9 million compared with $10.2 million in 2007, a decrease of $2.3 million or 23.1%.  This decrease is the result of lower earnings in our Peruvian operations.

Minority interest

Minority interest in 2007 was $10.2 million compared with $9.3 million in 2006, an increase of $0.9 million or 10.0%.  This increase is the result of higher earnings.

NOTE 13-MINORITY INTEREST:

For all the years presented, in the consolidated statement of earnings the minority interest is based on the earnings of the Company’s Peruvian Branch.

The minority interest of the Company’s Peruvian Branch is for investment shares, formerly called labor shares.  These shares were generated by legislation in place in Peru from the 1970s through 1989; such legislation provided for the participation of mining workers in the profits of the enterprises for which they worked.  This participation was divided between equity and cash.  The investment shares included in the minority interest on the balance sheet are the still outstanding equity distributions made to the Peruvian Branch’s employees.

In prior years the Company acquired some Peruvian investment shares in exchange for newly issued common shares of the Company and through purchases at market value.  These acquisitions have been accounted for as purchases of minority interests.  The excess paid over the carrying value was assigned to intangible assets and is being amortized based on production.  As a result of these acquisitions, the remaining investment shareholders hold a 0.71% interest in the Peruvian Branch and are entitled to a pro rata participation in the cash distributions made by the Branch.  The shares are recorded as a minority interest in the Company’s financial statements.

NOTE 13-MINORITY INTEREST:

For all the years presented, in the consolidated combined statement of earnings the minority interest is based on the earnings of the Company’s Peruvian Branch, and through October 2005 it also included the interest of minority shareholders in Minera Mexico.  In October 2005, the Company acquired an additional 0.81833% of the outstanding shares of Minera Mexico for $30.3 million.  This acquisition increased the Company’s holding in Minera Mexico to 99.95%.

The minority interest of the Company’s Peruvian Branch is for investment shares, formerly called labor shares.  These shares were generated by legislation in place in Peru from the 1970s through 1989; such legislation provided for the participation of mining workers in the profits of the enterprises for which they worked.  This participation was divided between equity and cash.  The investment shares included in the minority interest on the balance sheet are the still outstanding equity distributions made to the Peruvian Branch’s employees.

In prior years the Company acquired some Peruvian investment shares at market value.  These acquisitions have been accounted for as purchases of minority interests.  The excess paid over the carrying value was assigned to intangible assets and is being amortized based on production.  As a result of these acquisitions, the remaining investment shareholders hold a 0.71% interest in the Peruvian Branch and are entitled to a pro rata participation in the cash distributions made by the Branch.  The shares are recorded as a minority interest in the Company’s financial statements.

NOTE 13-MINORITY INTEREST:

For all the years presented, in the consolidated
combined statement of earnings the minority interest is based on the earnings
of the Company’s Peruvian Branch, and through October 2005 it also
included the interest of minority shareholders in Minera Mexico.  In October 2005, the Company acquired an
additional 0.81833% of the outstanding shares of Minera Mexico for $30.3
million.  This acquisition increased the
Company’s holding in Minera Mexico to 99.95%.

The minority interest of the Company’s Peruvian Branch is for
investment shares, formerly called labor shares.  These shares were generated by legislation in
place in Peru from the 1970s through 1989; such legislation provided for the
participation of mining workers in the profits of the enterprises for which
they worked.  This participation was
divided between equity and cash.  The
investment shares included in the minority interest on the balance sheet are
the still outstanding equity distributions made to the Peruvian Branch’s
employees.

In prior years the Company acquired some Peruvian
investment shares at market value.  These
acquisitions have been accounted for as purchases of minority interests.  The excess paid over the carrying value was
assigned to intangible assets and is being amortized based on production.  As a result of these acquisitions, the
remaining investment shareholders hold a 0.71% interest in the Peruvian Branch
and are entitled to a pro rata participation in the cash distributions made by
the Branch.  The shares are recorded as a
minority interest in the Company’s financial statements.

For all the years presented, the minority interest on the consolidated combined statement of earnings is based on the earnings of the Company’s Peruvian Branch, and through October 2004 it also included the minority interest held in certain subsidiaries of Minera Mexico as further described below.  In addition, it included the interest of minority shareholders in Minera Mexico.

On October 20, 2005, the Company acquired an additional 0.81833% of the outstanding shares of Minera Mexico for $30.3 million.  This acquisition increased the Company’s holding in MM to 99.95%.

The Company acquired 0.02 million investment shares at a cost of $0.1 million in 2004.  There were no purchases during 2005 and 2006.  These acquisitions have been accounted for as purchases of minority interests.  The carrying value of the minority interest purchased was reduced by $0.08 million in 2004 and the excess paid over the carrying value was assigned to intangible assets and is being amortized based on production.  As a result of these acquisitions, the remaining investment shareholders hold a 0.71% interest in the Branch and are entitled to a pro rata participation in the cash distributions made by the Peruvian Branch.  The shares are recorded as a minority interest in the Company’s financial statements.

In addition, on October 23, 2004, Minera Mexico reached an agreement with the National Union of Mine, Metallurgical and Similar Workers of the Mexican Republic (the “Union”) for the purchase of a 4.2% and 1.5% stock stake owned by the Union in two of its subsidiaries.  The stock was purchased by delivery of a note in the amount of $51.5 million.  The purchase price of the interest acquired was less than its carrying value by $31.8 million and, therefore, such negative goodwill was allocated as reduction of the long-lived assets to be amortized based on production.  This note was paid in full in February 2005.

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NOTE 12-MINORITY INTEREST:

For all the years presented, the minority interest on the consolidated combined statement of earnings is based on the earnings of the Company’s Peruvian Branch, and through October 2004 it also included the minority interest held in certain subsidiaries of Minera Mexico as further described below. In addition, it included the interest of minority shareholders in Minera Mexico.

On October 20, 2005, the Company acquired an additional 0.81833% of the outstanding shares of Minera Mexico and were purchased for $30.3 million.

The Company acquired 0.02 million and 0.2 million investment shares at a $0.1 million and $0.7 million in 2004 and 2003, respectively. There were no purchases during 2005. These acquisitions have been accounted for as purchases of minority interests. The carrying value of the minority interest purchased was reduced by $0.08 million and $0.5 million in 2004 and 2003, respectively, and the excess paid over the carrying value was assigned to intangible assets and is being amortized based on production. As a result of these acquisitions, the remaining investment shareholders hold a 0.71% interest in the Branch and are entitled to a pro rata participation in the cash distributions made by the Peruvian Branch. The shares are recorded as a minority interest in the Company’s financial statements.

In addition, on October 23, 2004, Minera Mexico reached an agreement with the National Union of Mine, Metallurgical and Similar Workers of the Mexican Republic (the “Union”) for the purchase of a 4.2% and 1.5% stock stake owned by the Union in two of its subsidiaries. The stock was purchased by delivery of a note in the amount of $51.5 million. The purchase price of the interest acquired was less than its carrying value by $31.8 million and, therefore, such negative goodwill was allocated as reduction of the long-lived assets to be amortized based on production. This note was paid in full in February 2005.

NOTE 12-MINORITY INTEREST:

For all the years presented, the minority interest on the consolidated combined statement of earnings is based on the earnings of the Company’s Peruvian Branch, and through October 2004 it also included the minority interest held in certain subsidiaries of Minera Mexico as further described below.  In addition, it included the interest of minority shareholders in Minera Mexico.

On October 20, 2005, the Company acquired an additional 0.81833% of the outstanding shares of Minera Mexico and were purchased for $30.3 million.

The Company acquired 0.02 million and 0.2 million investment shares at a $0.1 million and $0.7 million in 2004 and 2003, respectively.  There were no purchases during 2005.  These acquisitions have been accounted for as purchases of minority interests.  The carrying value of the minority interest purchased was reduced by $0.08 million and $0.5 million in 2004 and 2003, respectively, and the excess paid over the carrying value was assigned to intangible assets and is being amortized based on production.  As a result of these acquisitions, the remaining investment shareholders hold a 0.71% interest in the Branch and are entitled to a pro rata participation in the cash distributions made by the Peruvian Branch.  The shares are recorded as a minority interest in the Company’s financial statements.

In addition, on October 23, 2004, Minera Mexico reached an agreement with the National Union of Mine, Metallurgical and Similar Workers of the Mexican Republic (the “Union”) for the purchase of a 4.2% and 1.5% stock stake owned by the Union in two of its subsidiaries.  The stock was purchased by delivery of a note in the amount of $51.5 million.  The purchase price of the interest acquired was less than its carrying value by $31.8 million and, therefore, such negative goodwill was allocated as reduction of the long-lived assets to be amortized based on production.  This note was paid in full in February 2005.

NOTE 12-MINORITY INTEREST:

For all the years presented, the minority interest on the consolidated combined statement of earnings is based on the earnings of the Company’s Peruvian Branch, and through October 2004 it also included the minority interest held in certain subsidiaries of Minera Mexico as further described below.  In addition, it included the interest of minority shareholders in Minera Mexico.

On October 20, 2005, the Company acquired an additional 0.81833% of the outstanding shares of Minera Mexico and were purchased for $30.3 million.

The Company acquired 0.02 million and 0.2 million investment shares at a $0.1 million and $0.7 million in 2004 and 2003, respectively.  There were no purchases during 2005.  These acquisitions have been accounted for as purchases of minority interests.  The carrying value of the minority interest purchased was reduced by $0.08 million and $0.5 million in 2004 and 2003, respectively, and the excess paid over the carrying value was assigned to intangible assets and is being amortized based on production.  As a result of these acquisitions, the remaining investment shareholders hold a 0.71% interest in the Branch and are entitled to a pro rata participation in the cash distributions made by the Peruvian Branch.  The shares are recorded as a minority interest in the Company’s financial statements.

In addition, on October 23, 2004, Minera Mexico reached an agreement with the National Union of Mine, Metallurgical and Similar Workers of the Mexican Republic (the “Union”) for the purchase of a 4.2% and 1.5% stock stake owned by the Union in two of its subsidiaries.  The stock was purchased by delivery of a note in the amount of $51.5 million.  The purchase price of the interest acquired was less than its carrying value by $31.8 million and, therefore, such negative goodwill was allocated as reduction of the long-lived assets to be amortized based on production.  This note was paid in full in February 2005.

NOTE 11—MINORITY INTEREST:

        For all the years presented, the minority interest is based on the earnings of the Company's Peruvian Branch, and through October 2004 it also included the minority interest held in certain subsidiaries of MM as further described below.

        The Company acquired 2.3 million, 0.2 million and 0.02 million investment shares at a cost of US$8.8 million, US$0.7 million and US$0.1 million in 2002, 2003 and 2004, respectively. These acquisitions have been accounted for as purchases of minority interests. The carrying value of the minority interest purchased was reduced by US$6.8 million, US$0.5 million and US$0.08 million in 2002, 2003 and 2004, respectively, and the excess paid over the carrying value was assigned to intangible assets and is being amortized based on production. As a result of these acquisitions, the remaining investment shareholders are entitled to a pro rata participation in the cash distributions made by the Company. The shares are recorded as a minority interest in the Company's financial statements.

F-31

        In addition, on October 23, 2004, MM reached an agreement with the National Union of Mine, Metallurgical and Similar Workers of the Mexican Republic (the "Union") for the purchase of a 4.2% and 1.5% stock stake owned by the Union in two of its subsidiaries. The stock was purchased by delivery of a note in the amount of US$51.5 million. The purchase price of the interest acquired was less than its carrying value by US$31.8 million and, therefore, such negative goodwill was allocated as reduction of the long-lived assets to be amortized based on production. This note was paid in full in February 2005.

NOTE 11—MINORITY INTEREST:

        For all the years presented, the minority interest is based on the earnings of the Company's Peruvian Branch, and through October 2004 it also included the minority interest held in certain subsidiaries of MM as further described below.

        The Company acquired 2.3 million, 0.2 million and 0.02 million investment shares at a cost of US$8.8 million, US$0.7 million and US$0.1 million in 2002, 2003 and 2004, respectively. These acquisitions have been accounted for as purchases of minority interests. The carrying value of the minority interest purchased was reduced by US$6.8 million, US$0.5 million and US$0.08 million in 2002, 2003 and 2004, respectively, and the excess paid over the carrying value was assigned to intangible assets and is being amortized based on production. As a result of these acquisitions, the remaining investment shareholders are entitled to a pro rata participation in the cash distributions made by the Company. The shares are recorded as a minority interest in the Company's financial statements.

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        In addition, on October 23, 2004, MM reached an agreement with the National Union of Mine, Metallurgical and Similar Workers of the Mexican Republic (the "Union") for the purchase of a 4.2% and 1.5% stock stake owned by the Union in two of its subsidiaries. The stock was purchased by delivery of a note in the amount of US$51.5 million. The purchase price of the interest acquired was less than its carrying value by US$31.8 million and, therefore, such negative goodwill was allocated as reduction of the long-lived assets to be amortized based on production. This note was paid in full in February 2005.