The following discussion provides information that management believes is relevant to an assessment and understanding of the 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, 2008.

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, such as molybdenum, zinc, silver, lead and gold, which we also produce and sell. Market forces outside of our control largely determine the sales prices for our products. We, therefore, focus on copper production, cost control, production enhancement and maintaining a prudent capital structure to remain profitable. We believe we 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.

Earnings: Our first quarter 2009 results have continued to be negatively impacted by the decrease in the market price of our products. However, we believe we are seeing the first signs of the end of the destocking stage and the appearance of new demand in parts of Asia. Recent copper market prices have started to reflect this change in circumstances. LME and COMEX copper prices at April 30, 2009 increased 55.6% and 47.2%, respectively, from the prices at December 31, 2008. Nevertheless, during the current economic situation we are carefully controlling our cash expenditures and costs, which include a reduction of $87.3 million in our 2009 capital expenditure and exploration budget.

Net income attributable to SCC and income per share for the first quarter 2009 were $78.7 million and $0.09 per share and $565.0 million and $0.64 per share for first quarter 2008. The decrease in net income was mainly due to the lower metal prices.

Share repurchase: During the first quarter of 2009, under the $500 million share repurchase program, we purchased 4.9 million shares of our common stock at an average cost of $14.61 per share. Also, during the same period Grupo Mexico, through its wholly owned subsidiary Americas Mining Corporation ("AMC"), purchased 4.9 million of our common shares. With these acquisitions Grupo Mexico directly or indirectly owns 80% of our outstanding shares.

Production: Mine copper production amounted to 264.1 million pounds in the first quarter of 2009 compared with 281.9 million pounds in the first quarter of 2008, a decrease of 6.3%. This decrease was principally due to the strike at Cananea. However, in the first quarter of 2009 we have increases over the first quarter of 2008 in molybdenum production of 3.4%, zinc mined and refined production of 9.2% and 4.0%, respectively, and silver mined and refined production of 1.8% and 1.5%, respectively.

Cananea strike: Operations at our Cananea, San Martin and Taxco facilities remained closed during the first quarter of 2009, due to strike activities. These strikes began in July 2007, and despite our efforts, remain unresolved. However, on April 14, 2009,

the Mexican Federal Labor Court issued a resolution, based on force majeure, approving the termination of Cananea's labor relationship with individual and unionized employees, as well as the termination of its collective bargaining agreement with its employees and with the National Mining and Metal Workers Union.

In addition, the Mexican Federal Labor Court determined that damages to the machinery, materials, facilities and other equipment at the Cananea mine significantly hinder its operation and, as a result, the termination of all labor relationships are legally justified.

To repair the damages suffered by the Cananea mine and plant, significant investments and reconstruction work will be required over several months. Hence, we are assessing the best course of action to take once the legal and safety conditions necessary to allow us to restore operations at Cananea are established.

The court ordered us to compensate the workers with three months pay plus 12 days salary for each year worked at the mine. We estimate that the liability for these termination payments has been provided for by a provision previously accrued on our consolidated balance sheet. The workers' union announced the appeal of this ruling.

Reevaluation of capital expenditures: As previously announced, capital projects have been reevaluated as a result of the sharp decrease in metal prices and the world's unsettled economy. For 2009 we have further reduced our capital and exploration budget from $415.3 million to $328.0 million. Of this amount, $236.1 million is for special projects, $69.2 million is for maintenance and replacement capital expenditures and $22.7 million for exploration.

KEY MATTERS:

We discuss below several matters that we believe are important to understand our results of operations and financial condition. These matters include, (i) our "operating cash costs" as a measure of our performance, (ii) metal prices,
(iii) business segments, (iv) the effect of inflation and other local currency issues, (v) our expansion and modernization program and environmental protection programs.

Operating Cash Costs: An overall benchmark used by us and 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. A reconciliation of our operating cash cost per pound to the cost of sales (exclusive of depreciation, amortization and depletion) as presented in the condensed consolidated statement of earnings, is presented under the subheading "Non-GAAP Information Reconciliation," below. We have defined operating cash cost per pound as cost of sales (exclusive of depreciation, amortization and depletion); plus selling, general and administrative charges, treatment and refining charges, and by-products revenue and sales premiums; less workers' participation and other miscellaneous charges, including the Peruvian mine royalty charge and the change in inventory levels; divided by total pounds of copper produced and purchased by us. In our calculation of operating cash cost per pound of copper produced, we credit against our costs the revenues from the sale of by-products, principally molybdenum, zinc, silver and the premium over market price that we receive on copper sales. We account for the by-product revenues in this way because we consider our principal business to be the production and sale of copper. 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 also include copper sales premiums as a credit, as these amounts are in excess of published copper prices. The increase in recent years in the price of molybdenum as well as increases in silver and zinc, has had a significant effect on our traditional calculation of cash cost and its

comparability between periods. Accordingly, we present cash costs with and without crediting the by-products revenues against our costs.

We exclude from our calculation of operating cash cost 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. Additionally, excluded from operating cash cost are items of a non-recurring nature and the mine royalty charges.

Our operating cash costs per pound, as defined, are presented in the table below, for the three months ended March 31, 2009 and 2008. We present cash costs with and without the inclusion of by-product revenues.

                                                 Three Months Ended      Positive
                                                     March 31,          (negative)
                                                 2009         2008       Variance
                                                        (cents per pound)
Operating cash cost per pound of copper
produced and purchased                              64.4        (12.6 )      (77.0 )
Less: by-products revenue                           75.7        162.9        (87.2 )
Operating cash cost per pound of copper
produced and purchased without by-products
revenue                                            140.1        150.3         10.2

As seen on the chart above, our per pound cash cost for the first quarter of 2009 when calculated with by-products revenue are costs of 64.4 cents per pound compared with a credit of 12.6 cents per pound in the first quarter of 2008. The decrease in the by-products credit in the 2009 period was principally due to lower molybdenum, zinc and silver prices, which decreased from the first quarter of 2008 by 73.5%, 51.8% and 28.3%, respectively. Increases in the volume of molybdenum, zinc and silver sales partially reduced the price decline.

Our cash cost, excluding by-product revenues, was lower by 10.2 cents per pound in the first quarter of 2009 than the comparable 2008 period and is due to lower power, fuel and material repair costs partially offset by the lower copper production at Cananea due to the ongoing strike.

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, especially for copper, molybdenum, zinc and silver. Metal prices historically have been subject to wide fluctuations and are affected by numerous factors beyond our control. These factors, which affect each commodity to varying degrees, include international economic and political conditions, levels of supply and demand, the availability and cost of substitutes, inventory levels maintained by producers and others and, to a lesser degree, inventory carrying costs and currency exchange rates. In addition, the market prices of certain metals have on occasions been subject to rapid short-term changes due to speculative activities.

We are subject to market risks arising from the volatility of copper and other metal prices. Assuming that expected metal production and sales are achieved, that tax rates are unchanged, giving no effect to potential hedging programs, metal price sensitivity factors would indicate the following change in estimated 2009 net income attributable to SCC resulting from metal price changes:

                                             Copper     Molybdenum      Zinc      Silver
Change in metal prices (per pound, except
silver - per ounce)                         $    0.01   $      1.00   $   0.01   $    1.00
Annual change in net income attributable
to SCC (in millions)                        $     6.0   $      23.1   $    1.3   $    10.1

Business Segments.

We view our Company as having three operating segments and manage on the basis of these segments. These segments are our (1) 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 which 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 Cananea mine complexes, the smelting and refining plants and support facilities which service both mines. The Mexican open pit operations produce copper, with significant by-product production of molybdenum, silver and other material. Our IMMSA unit includes five underground mines that produce zinc, lead, copper, silver and gold, a coal mine which produces coal and coke, and several industrial processing facilities for zinc, copper and silver.

Segment information is included in our review of "Results of Operations" and also in Note M of our condensed consolidated financial statements.

Inflation and Devaluation of the Peruvian Nuevo Sol and the Mexican Peso.

Our functional currency is the U.S. dollar. Portions of our operating costs are denominated in Peruvian nuevos soles and Mexican pesos. Since our revenues are primarily denominated in U.S. dollars, when inflation/deflation in Peru or Mexico is not offset by a change in the exchange rate of the nuevo sol or the peso, respectively, to the dollar, our financial position, results of operations and cash flows could be adversely affected to the extent that the inflation/devaluation effects are passed onto us by our suppliers or reflected in our wage adjustments. In addition, the dollar value of our net monetary assets denominated in nuevos soles or pesos can be affected by devaluation of the nuevo sol or the peso, resulting in a remeasurement loss in our financial statements. Recent inflation and devaluation rates are provided in the table below for the three months ended March 31, 2009 and 2008:

                                                    Three Months Ended
                                                        March 31,
                                                     2009        2008
Peru:
Peruvian inflation rate                                 0.4 %       2.2 %
Nuevo sol/dollar devaluation/(appreciation) rate        0.6 %      (8.4 )%

Mexico:
Mexican inflation rate                                  1.0 %       1.5 %
Peso/dollar devaluation/(appreciation) rate             5.9 %      (1.6 )%

Capital Expansion and Exploration Program.

We made capital expenditures of $63.0 million and $49.9 million in the first quarter 2009 and 2008, respectively, and we expect to make capital expenditures, of approximately $305.3 million in 2009 and $22.7 million, additionally for exploration. In general, the

capital expenditures and projects described below are intended to increase production and/or decrease costs.

In light of the current business environment we have suspended most of our capital investments in new as well as in expansion projects. Set forth below are descriptions of some of our current expected capital expenditures. We expect to meet the cash requirements for these projects from cash on hand, internally generated funds and from additional external financing, if required.

Peruvian Operations:

Tia Maria project: As a result of an engineering revaluation in the first quarter of 2009, we decided to move forward with the project after reducing the total budget from $1.2 billion estimated at the end of the fourth quarter 2008 to $949 million, of which $115.8 million was spent as of March 31, 2009.

Toquepala concentrator expansion: As of the end of March 2009, we have spent $50.8 million on this project. The basic engineering was completed by Hatch Engineering in January 2009. We will review Hatch's proposal for the detailed engineering in May 2009; at which time we may consider soliciting additional proposals, a process that would take about three more months. The environmental impact assessment is underway and is expected to be completed in the fourth quarter of this year. However, we have decided to put on hold any new additional spending for this project.

Ilo Smelter Modernization: The complimentary project to the Ilo smelter modernization is the construction of a marine trestle to offload directly to offshore ships the sulfuric acid produced at the smelter. At March 31, 2009 this project reached 69.8% completion and is expected to be completed in June 2009. The completed project is expected to ease congestion in our Ilo area.

Tailings disposal at Quebrada Honda: This project will increase the height of the existing Quebrada Honda dam to impound future tailings from the Toquepala and Cuajone mills. The procurement of the main equipment and materials was finished. Construction of the principle civil, mechanical and electrical installations for the main and lateral dams has been completed. The lateral dam was commissioned in December 2008 and the main dam was commissioned in March 2009. Progress on the first stage of this project is 99.7% complete, with final completion expected in the second quarter of 2009. The total cost of this project is estimated to be $66.0 million, with $38.9 million expended through March 31, 2009.

Mexican operations:

We are continuing with the environmental projects at our Mexican mining and metallurgical facilities. At La Caridad metallurgical complex the gas handling project has been completed and the first stage (copper bearing dust) of the dust and effluent treatment plant project is in operational testing. These projects are at 100% and 78% of completion, respectively, and have a combined budget of $9.0 million for 2009.

Other capital expenditures:

The feasibility study for El Arco project was finished during the first quarter 2009. The selected production scale for the project indicates an annual production of 190,000 tons of copper, 105,000 ounces of gold and 1,700 tons of molybdenum with an estimated mine life of 35 years. The project has an estimated capital cost of approximately $1.8 billion. Considering a copper price of $1.50 per pound, the economic evaluation of this project indicates a positive return for the Company. The Board of Directors has given approval to proceed with the environmental impact assessment and the basic engineering for El Arco and also has approved $20.9 million for the purchase of mineral land and for drilling water wells. Given the investment size we are evaluating several options to develop this project.

We are also looking very closely our maintenance and replacement capital expenditures. The 2009 budget has been reduced from $79.0 million to $69.2 million.

ACCOUNTING ESTIMATES

Our discussion and analysis of financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with US GAAP. Preparation of these condensed 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 periods. Management makes its 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, estimated mine stripping ratios, leachable material and related amortization, the estimated useful lives of fixed assets, asset retirement obligations, litigation and contingencies, valuation allowances for deferred tax assets, tax positions, fair value of financial instruments and inventory obsolescence. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

RESULTS OF OPERATIONS



The following highlights key financial and operating results for the three
months ended March 31, 2009 and 2008 (in millions):



                                                        Three Months Ended
                                                            March 31,
                                                        2009         2008
Statement of Earnings Data:

Net sales                                             $   622.0    $ 1,499.2
Operating costs and expenses                             (477.9 )     (634.5 )
Operating income                                          144.1        864.7
Non-operating income (expense)                            (16.8 )      (11.0 )
Income before income taxes                                127.3        853.7
Income taxes                                              (48.0 )     (286.0 )
Net income attributable to non-controlling interest        (0.6 )       (2.7 )
Net income attributable to SCC                        $    78.7    $   565.0

Mine copper production amounted to 264.1 million pounds in the first quarter of 2009 compared with 281.9 million pounds in the first quarter of 2008, a decrease of 6.3%. This decrease of 17.8 million pounds, included a decrease of 20.4 million pounds from the Mexican open pit operations partially offset by an increase of 2.3 million pounds from the Peruvian open pit mines and 0.3 million pounds from the Mexican underground mines.

The 20.4 million pound decrease in the Mexican open-pit mines production included a decrease of 27.4 million pounds from the Cananea mine net of an increase of 7.0 million pounds from the La Caridad mine. The Cananea mine decrease was due to the effect of its strike, which limited first quarter 2008 production to 27.4 million pounds and eliminated all production in the first quarter of 2009. The increase in production at La Caridad mine was due to increased ore mined and higher PLS grade. The increase in

the Peruvian mines came from the Toquepala mine, which increased by 3.2 million pounds, and was the result of higher ore mined, partially offset by a decrease of 0.9 million pounds from the Cuajone mine due to lower ore grade.

Molybdenum mine production increased by 0.3 million pounds in the first quarter of 2009 to 8.9 million pounds compared with 8.6 million pounds in the first quarter of 2008. This increase was mainly due to higher ore grade and recovery at the La Caridad mine and higher recovery at Cuajone mine, partially offset by lower ore grade and recovery at the Toquepala mine.

Mine zinc production increased 5.0 million pounds in the first quarter 2009, to 59.6 million pounds compared with 54.6 million pounds in the first quarter of 2008. This 9.2% increase in production was due to higher ore grades and recoveries at Charcas, Santa Eulalia and Santa Barbara mines.

Average Metal Prices



The table below outlines the average metal prices during the three months period
ended March 31, 2009 and 2008:



                                  Three Months Ended March 31,
                                2009       2008        % Change
Copper ($ per pound - LME)        1.56       3.54           (55.9 )
Copper ($ per pound - COMEX)      1.57       3.53           (55.5 )
Molybdenum ($ per pound)          8.75      33.01           (73.5 )
Zinc ($ per pound - LME)          0.53       1.10           (51.8 )
Silver ($ per ounce - COMEX)     12.63      17.62           (28.3 )

Net Sales. Net sales in the first quarter of 2009 decreased by $877.2 million compared to the first quarter of 2008. This 58.5% decrease was principally due to lower metal sales prices.

The table below presents information regarding the volume of our copper sales by segment for the three months ended March 31, 2009 and 2008:

Copper Sales (million pounds):



                                      Three Months Ended March 31,
                                         2009              2008
Copper:
Peruvian operations                          186.8             180.8
Mexican open-pit                              68.8              85.1
Mexican IMMSA unit                            10.7               9.4
Other and intersegment elimination            (1.2 )            (4.5 )
Total copper sales                           265.1             270.8

The table below presents information regarding the volume of sales by segment of our significant by-products for the three months ended March 31, 2009 and 2008:

By-product Sales:



(in million pounds except silver - in     Three Months Ended March 31,
million ounces)                             2009               2008
Peruvian operations
Molybdenum contained in concentrates              3.7                4.9
Silver                                            1.0                0.8

Mexican open-pit
Molybdenum contained in concentrates              5.2                4.0
Silver                                            1.2                0.7

Mexican IMMSA unit
Zinc - refined and in concentrate                58.1               51.1
Silver                                            3.0                2.0

Other and intersegment elimination
Zinc - refined and in concentrate                 1.1                1.4
Silver                                           (1.2 )             (0.5 )

Total by-product sales
Molybdenum contained in concentrates              8.9                8.9
Zinc - refined and in concentrate                59.2               52.5
Silver                                            4.0                3.0

Operating Costs and Expenses.

Operating costs and expenses were $477.9 million in the first quarter of 2009 compared with $634.5 million in the first quarter of 2008. The decrease of $156.6 million was principally due to lower cost of sales (exclusive of depreciation, amortization and depletion).

Cost of sales (exclusive of depreciation, amortization and depletion) for the first quarter 2009 was $375.5 million compared with $520.6 million in the first quarter 2008. The decrease of $145.1 million was primarily attributable to the following: 1) $59.0 million of lower workers participation due to reduced in earnings, 2) $39.5 million of lower fuel and power cost, mainly in our Peruvian operations (the average unit cost for our power consumption decreased by 25.4% in 2009, as effect of lower cost of coal and other fuels over our power purchased agreement), 3) $23.4 million of lower production costs including labor . . .