{"url_path":"/sec/scco/10-k/2026/item-7a","section_key":"item-7a","section_title":"Item 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-02-27","source_url":"https://www.sec.gov/Archives/edgar/data/1001838/0001104659-26-021492-index.html","accession_number":"0001104659-26-021492","cik":"0001001838","ticker":"SCCO","issuer_name":"SOUTHERN COPPER CORP/","edgar_url":"https://www.sec.gov/Archives/edgar/data/1001838/0001104659-26-021492-index.html","primary_entity_key":"0001001838","primary_entity_name":"SOUTHERN COPPER CORP/"},"word_count":554,"has_tables":true,"body_markdown":"**ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**\n\n​\n\nCommodity price risk:\n\nFor additional information on metal price sensitivity, refer to “Metal Prices” in Part II, Item 7 of this annual report.\n\n​\n\nOpen sales risk:\n\nOur provisional copper and molybdenum sales contain an embedded derivative that is required to be separate from the host contract for accounting purposes. The host contract is the receivable from the sale of copper or molybdenum concentrates at prevailing market prices at the time of the sale. The embedded derivative, which does not qualify for hedge accounting, is marked to market through earnings in each period prior to settlement. See Note 18 to the consolidated financial statements for further information about these provisional sales.\n\n​\n\nForeign currency exchange rate risk:\n\nOur functional currency is the U.S. dollar. Portions of our operating costs are denominated in Peruvian soles and Mexican pesos. Given that our revenues are primarily denominated in U.S. dollars, when inflation or deflation in our Mexican or Peruvian operations is not offset by a change in the exchange rate of the sol or the peso to the dollar, our financial position, results of operations and cash flows could be affected by local cost conversion when expressed in U.S. dollars. In addition, the dollar value of our net monetary assets denominated in soles or pesos can be affected by an exchange rate variance of the sol or the peso, resulting in a re-measurement gain or loss in our financial statements. Recent inflation and exchange rate variances for the three years ended December 31, 2025 are provided in the table below:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**Year Ended**\n\n​\n\n​\n\n​\n\n**December 31, **\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**2025**\n\n**  ​ ​ ​**\n\n**2024**\n\n**  ​ ​ ​**\n\n**2023**\n\n​\n\nPeru:\n\n \n\n  ​\n\n \n\n  ​\n\n \n\n  ​\n\n​\n\nPeruvian inflation rate\n\n \n\n1.5\n\n%  \n\n2.0\n\n%  \n\n3.2\n\n%\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nInitial exchange rate\n\n \n\n3.770\n\n \n\n3.713\n\n \n\n3.820\n\n​\n\nClosing exchange rate\n\n \n\n3.368\n\n \n\n3.770\n\n \n\n3.713\n\n​\n\nAppreciation/(devaluation)\n\n \n\n10.7\n\n%  \n\n(1.5)\n\n%\n\n2.8\n\n%\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nMexico:\n\n \n\n  ​\n\n \n\n  ​\n\n \n\n  ​\n\n​\n\nMexican inflation rate\n\n \n\n3.7\n\n%  \n\n4.2\n\n%  \n\n4.7\n\n%\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nInitial exchange rate\n\n \n\n20.268\n\n \n\n16.894\n\n \n\n19.362\n\n​\n\nClosing exchange rate\n\n \n\n17.967\n\n \n\n20.268\n\n \n\n16.894\n\n​\n\nAppreciation/(devaluation)\n\n \n\n11.4\n\n%  \n\n(20.0)\n\n%\n\n12.7\n\n%\n\n​\n\nChange in monetary position:\n\n​\n\nAssuming an exchange rate variance of 10% at December 31, 2025, we estimate our net monetary position in Peruvian sol and Mexican peso would increase (decrease) our net earnings as follows:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**Effect in net**\n\n​\n\n** **\n\n**earnings**\n\n​\n\n** **\n\n**($ in millions)**\n\nAppreciation of 10% in U.S. dollar vs. Peruvian sol\n\n​\n\n$\n\n34.8\n\nDevaluation of 10% in U.S. dollar vs. Peruvian sol\n\n​\n\n$\n\n(42.5)\n\nAppreciation of 10% in U.S. dollar vs. Mexican peso\n\n​\n\n$\n\n20.9\n\nDevaluation of 10% in U.S. dollar vs. Mexican peso\n\n​\n\n$\n\n(25.6)\n\n​\n\nThe net monetary position is net of those assets and liabilities that are sol or peso denominated as of December 31, 2025.\n\n​\n\nShort-term investments:\n\n​\n\nFor additional information on our trading securities and available-for-sale investments, refer to Note 3 Short-term Investments in Part II, Item 8 of this annual report.\n\n126\n\n[Table of Contents](#TOC)\n\n​"}