| Cost of sales of goods and services, without considering depreciation and amortization |
21. Cost of sales of goods and services, without considering depreciation and amortization | (a) | The cost of sales of goods is made up as follows: |
| | | | | | | | | 2024 | | 2023 | | 2022 | | | US$(000) | | US$(000) | | US$(000) | | | | | | | | Beginning balance of finished goods and products in process, net of depreciation and amortization | | 18,748 | | 22,667 | | 30,031 | | | | | | | | Cost of production | | | | | | | Services provided by third parties | | 239,804 | | 166,227 | | 185,028 | Direct labor | | 106,022 | | 77,781 | | 67,704 | Consumption of materials and supplies | | 104,063 | | 93,407 | | 94,929 | Short-term and low-value leases | | 39,747 | | 26,794 | | 29,329 | Maintenance and repair | | 22,903 | | 21,601 | | 21,099 | Insurance | | 20,823 | | 16,946 | | 16,118 | Electricity and water | | 14,707 | | 28,729 | | 21,510 | Transport | | 11,763 | | 13,589 | | 13,528 | Other | | 14,912 | | 4,510 | | 6,404 | Provision (reversal) for impairment of finished goods and product in progress, note 8(b) | | (6,487) | | 3,851 | | (1,071) | Total cost of production | | 568,257 | | 453,435 | | 454,578 | Final balance of finished goods and products in process | | (18,523) | | (18,748) | | (33,624) | Write – off of products in process | | — | | — | | 10,957 | Final balance of finished goods and products in process, net of depreciation and amortization | | (18,523) | | (18,748) | | (22,667) | Cost of sales of goods, without considering depreciation and amortization | | 568,482 | | 457,354 | | 461,942 |
See related accounting policies in Note 2.4(x).
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| Cost of sales of goods and services, without considering depreciation and amortization |
15. Cost of sales This item is made up as follows: | | | | | | | | | For the year ended | | For the year ended | | For the year ended | | | December 31, 2024 | | December 31, 2023 | | December 31, 2022 | | | US$(000) | | US$(000) | | US$(000) | | | | | | | | Materials and supplies | | 917,531 | | 982,616 | | 915,323 | Property plant and equipment depreciation (see Note 7) | | 571,852 | | 530,199 | | 489,700 | Labor (a) | | 501,678 | | 381,761 | | 343,575 | Third-party services | | 239,547 | | 279,923 | | 246,247 | Energy | | 209,925 | | 249,039 | | 243,549 | Change in work in process inventory | | 49,764 | | 13,538 | | (1,358) | Variable lease payments, low-value and short-term leases | | 19,775 | | 17,741 | | 13,369 | Depreciation on right-of-use assets (see Note 7) | | 11,152 | | 11,117 | | 12,708 | OEFA and OSINERGMIN contributions (b) | | 8,208 | | 8,015 | | 9,308 | Supplementary Retirement Fund contribution (c) | | 7,861 | | 7,467 | | 6,371 | Loss on materials obsolescence, net (see note 5(a)) | | 6,897 | | 12,496 | | 4,053 | Management fees | | 3,227 | | 3,098 | | 2,540 | Intangible amortization | | 2,342 | | 2,342 | | 2,342 | Change in finished goods inventory | | 2,110 | | 14,165 | | (10,368) | WIP stockpile write-offs (see Note 5(b)) | | — | | 1,527 | | 7,668 | Cost related to COVID-19 pandemic | | — | | — | | 43,672 | Other costs | | 36,910 | | 48,475 | | 45,439 | | | | | | | | | | 2,588,779 | | 2,563,519 | | 2,374,138 |
| (a) | For the year ended December 31, 2024, labor includes an expense of US$138.4 million related to profit sharing (US$130.9 million and US$118.2 million for the year ended December 31, 2023, and 2022 respectively). In October 2024, the Company reached new four - year collective labor agreement (CLA) with one of its two unions and recorded nonrecurring charges of US$30.6 million in third quarter 2024 associated with the new CLA. The agreement follows the successful completion of a new CLA with the second union in April 2024 for which the Company recorded nonrecurring charges of US$66.5 million. |
| (b) | The Company is subject to OEFA and OSINERGMIN royalties. These funds are used by these agencies as part of their operating budgets for investment supervision in energy and mining, as well as the environment. The calculation for the OSINERGMIN royalty is 0.14% of invoiced sales and the calculation for the OEFA royalty is 0.10% of invoiced sales for the year 2024, 2023 and 2022. |
| (c) | On July 9, 2011, Law No. 29741 was published, through which the contribution to the Mining, Metallurgical and Steelworks Supplementary Retirement Fund was created. These resources constitute a social security retirement fund for mining, metallurgical and steelworkers. The Mining Supplementary Retirement Fund is applicable to the Company and is calculated based on 0.5% of the annual taxable profit. |
In compliance with corporate policies, the Company recognizes administrative costs as an inventory cost (approximately US$32.5 million, US$32.6 million and US$44.5 million for the year ended December 31, 2024, 2023 and 2022 respectively). The effect of this policy is immaterial to the financial statements as a whole.
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