Southern Copper Corp/ Q3 FY2020 Earnings Call

Good morning, and welcome to Southern Copper Corporation's Third Quarter 2020 Results Conference Call. With us this morning, we have Southern Copper Corporation's Mr. Raul Jacob, Vice President, Finance, Treasurer and CFO, who will discuss the results of the company for the third quarter 2020 as well as answer any questions that you might have. The information discussed on today's call may include forward-looking statements regarding the company's results and prospects, which are subject to risks and uncertainties. Actual results may differ materially, and the company cautions to not place undue reliance on these forward-looking statements. Southern Copper Corporation undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All results are expressed in full U.S. GAAP. Now I will pass the call on to Mr. Raul Jacob.

Thank you very much, Gigi. Good morning to everyone, and welcome to Southern Copper's Third Quarter of 2020 Results Conference Call. Before we delve into the details of the past quarter, I would like to extend my best wishes to you and your loved ones during these challenging times. Today, we will start with an update on the measures we've implemented to combat COVID-19 and the impact of the pandemic on our operations. We will also discuss the copper market and Southern Copper's key performance indicators, including production, sales, operating costs, financial results, and expansion projects. After that, we will open the floor for questions. As I mentioned earlier, we are actively fighting the COVID-19 pandemic by prioritizing the health and safety of our workforce, their families, and the communities around us. Our operations comply with emergency protocols mandated by local, regional, and national authorities, and we have instituted strict hygiene, sanitation, and safety measures across all our facilities. As of September 30 of this year, our operations are running at 96% capacity. Approximately 97% of our workforce in Mexico is active, and 67% in Peru is engaged either on-site or from home. In July, we allowed our most essential contractors back on-site, all of whom adhere to stringent protocols including COVID-19 testing, routine health monitoring, and mandatory quarantines. We have implemented travel restrictions to minimize exposure to the virus, prohibit in-person meetings, encourage regular hand washing, and require compliance with all health, safety, and social distancing guidelines established by authorities. Since the onset of the pandemic, Southern Copper has enacted solid prevention strategies to safeguard the health of its employees, their families, and the surrounding communities. We allocated a budget of $14.6 million for donations and general support for those in Peru and Mexico, of which 95% has already been utilized. We continue to engage with local communities and authorities to enhance our fight against COVID-19. To strengthen our response, we've donated 290,000 medical supplies and 213 ventilators to hospitals in the areas where we operate. In Mexico, we've established 49 isolation beds in company-owned housing in Sonora for those needing isolation or primary medical care. In Peru, we've donated 18 temporary hospitals with a total capacity of 250 beds that provide oxygen. We have also supplied over 318,000 liters of liquid oxygen to national hospitals treating COVID-19 patients in regions of Arequipa and Moquegua. Additionally, we are contributing a COVID-19 molecular testing laboratory in Moquegua and two medicinal oxygen plants, one in Tacna and the other in Puno, with capacities of 720 cubic meters per day and 222 cubic meters per day, respectively. We provided more than 63,600 personal protective equipment kits to medical personnel and 25,000 hygiene kits to our workers and the communities we impact. These contributions include informative materials about COVID-19, its transmission, and symptoms. We have also supported members of the National Guard in Mexico and the Peruvian Police and Army with sanitation and protective equipment. Furthermore, we are assisting vulnerable groups such as the elderly, disabled individuals, and pregnant women by distributing over 45,900 food and hygiene kits. In our commitment to promoting preventive health measures, we've installed over 310 portable sinks in key community locations to facilitate hand washing. To reinforce compliance with stay-at-home guidelines, we're offering 3,742 sports, cultural, and educational workshops online. We sponsor 11 schools with 3,677 students, who have participated in 470,483 online courses to ensure continuity in their education. We also provide free medical, psychological, and employment counseling around the clock. Our efforts also encompass special programs benefiting surrounding communities. For the elderly, 313 community volunteers have taken part in a letter exchange initiative involving delivered messages and virtual visits. In support of urban agriculture, we have provided 2,199 supply kits and assisted community volunteers in producing over 40,000 face masks. Given the challenges posed by the COVID-19 pandemic, we recognize that mine development and investment will be crucial for the recovery of both Mexico and Peru's economies. Therefore, we will persist in advancing our projects, as we believe Southern Copper's operations are stable sources of economic resources that deliver well-compensated jobs and tax revenues for the nations in which we operate. Now, let's turn our attention to the copper market, the cornerstone of our business. In the third quarter of 2020, the London Metal Exchange copper price rose from an average of $2.63 per pound in the third quarter of 2019 to $2.96, marking a 12.5% increase. Currently, prices are around $3.10 per pound, reflecting the impacts of the COVID-19 crisis on copper supply and demand, as well as the liquidity provided by central banks in developed markets. The copper price at this point is influenced by two main factors: expected supply reductions from Chile due to labor negotiations and increasing demand from China and other Asian economies amid an economic recovery. Given the current supply and demand outlook, we maintain a positive long-term view on copper prices. Now, regarding Southern Copper's production for the last quarter and projections for 2020, copper accounted for 82.2% of our sales in the third quarter. Copper production decreased by 2.3% compared to the same quarter last year, totaling 246,560 tons in the third quarter of 2020. This decline was mainly due to reduced production at our Peruvian mines, which was influenced by lower ore grades, though higher output at our Mexican mines, particularly Buenavista, partially offset this effect due to better ore grades. For the full year 2020, we expect to produce 996,500 tons of copper, consistent with last year’s output and slightly below our production plan. Molybdenum made up 5.6% of our sales value in the third quarter and is our second-largest by-product. Molybdenum prices averaged $7.57 per pound in the quarter, down 35.6% from $11.76 in the same quarter last year. However, molybdenum production rose by 7.8% in the third quarter compared to 2019, mostly due to increases at our Toquepala mine. Silver contributed 6.2% to our sales value in the last quarter, with an average price of $24.59 per ounce, a 44.8% increase from the previous year. Although silver production fell by 1.3% in the past quarter, we saw positive production increases at the San Martin mine and La Caridad. For 2020, we anticipate producing 21.6 million ounces of silver, 6.7% more than last year's figures, thanks mainly to contributions from San Martin. Zinc accounted for 2.9% of our sales in the third quarter, averaging $1.06 per pound. Zinc production slightly decreased by 0.4% quarter on quarter, primarily due to the closure of our Santa Eulalia operation earlier this year due to flooding. However, this decrease was largely offset by production increases at the San Martin and Santa Barbara mines. In terms of financial results, sales in the third quarter of 2020 reached $2.1 billion, up $269.5 million or 14.5% from the same quarter in 2019. Copper sales volume rose by 2.1%, and value increased by 18.4% due to better prices. Silver sales jumped by 50% helped by slight volume increases and much better prices, while zinc sales grew by 8.7%, buoyed by a 7% rise in volume with stable prices. However, lower molybdenum sales, down 23.5% due to price drops, partially offset these gains. Total operating costs and expenses increased by $39.4 million or 3.4% compared to the third quarter of 2019, mainly due to hikes in purchased copper, capitalized leachable material, workers' participation, and sales expenses. However, these were partly countered by lower operational costs, contractor usage, diesel and fuel expenditures, and other operational and repair materials. In the third quarter of 2020, adjusted EBITDA was $1,125.9 million, representing a 24% increase compared to $907.7 million in the same period last year, with an adjusted EBITDA margin of 52.9% against 48.8% in the third quarter of 2019. Quarter-over-quarter, EBITDA rose by 46.2% from the second quarter of 2020. The operating cash cost per pound of copper before by-product credits was $1.36 in the third quarter, up $0.092 from the previous quarter, reflecting price increases in production and treatment costs. Southern Copper's operating cash cost, including by-product credits, was $0.645 per pound in Q3, a decrease from $0.67 in the second quarter. Regarding by-products, we achieved a total credit of $374.3 million, or $0.711 per pound, in the third quarter, marking a 19.8% increase compared to $321.5 million or $0.593 per pound in the second quarter. The rise in credits stemmed from increases in molybdenum, zinc, silver, and sulfuric acid. The net income for the third quarter was $506 million, or diluted earnings per share of $0.65, a 29.9% increase from the same quarter in 2019. The net income margin for this period was 23.8% compared to 21% in 2019. This growth is predominantly attributed to enhanced sales. Quarter-over-quarter, net income soared by 95% compared to Q2 2020. Southern Copper's investment philosophy centers on asset quality rather than just copper price forecasts. Our robust financial discipline has enabled ongoing investments in our significant asset portfolio. The COVID-19 pandemic has led us to implement new measures to mitigate project execution risks, including frequent COVID-19 testing, temperature checks, mandatory mask usage, social distancing on sites, and mandatory quarantine for our personnel and contractors. Where infections surge, some activities have been postponed or reduced, especially at construction sites. However, we are carrying on with other engineering, procurement, and construction efforts that can adhere to safety protocols. At present, we do not anticipate major delays in project timelines. In terms of our Peruvian project portfolio, we have $2.8 billion in approved projects, with $1.6 billion already invested, primarily in the Toquepala concentrator expansion. Including upcoming projects like Michiquillay and Los Chancas, our total investment in Peru is $7.9 billion. Regarding the Tia Maria project, we are dedicated to enhancing the welfare of the Islay province population through successful education, healthcare, and development programs. The third quarter of 2020 brought forth positive evaluations of our community relations and our water management plan, which aligns with international standards. We believe that starting the construction phase of Tia Maria will generate significant economic benefits for the Islay province and the Arequipa region. We aim to prioritize hiring local workers for the 9,000 jobs expected during the construction phase, directly employing 600 workers and providing indirect employment for an additional 4,200 workers once operational. Also, we expect to contribute significantly to revenue through taxes and royalties from the project's operations. For our Mexican projects, we have developed a new zinc concentrator at the Buenavista site, expected to produce about 80,000 tons of zinc and 20,000 tons of copper annually. This project is progressing well and we plan to commence operations in the third quarter of 2022, creating 490 direct jobs and 1,470 indirect jobs. The Pilares project, located 6 kilometers from La Caridad, will also operate as an open pit mine with a projected capacity of 35,000 tons of copper in concentrate. With a budget of $159 million, we expect production to start in the first half of 2022. In addition, the El Pilar project offers a low capital intensity venture with an estimated production capacity of 36,000 tons of copper cathodes, budgeted at $310 million, with commencement expected in 2023. We have also initiated steps for our El Arco project, located in Baja California, expecting it to yield around 190,000 tons of copper and 105,000 ounces of gold annually with an estimated capital requirement of $2.9 billion. As per our dividend policy, the company's board reviews cash positions, expected cash flow from operations, its capital investment plan, and other financial needs at each meeting to determine appropriate quarterly dividends. Therefore, we announced on October 22 that the Board of Directors authorized a cash dividend of $0.50 per share, payable on November 24 to shareholders on record by the close of business on November 11 of this year. Thank you very much for joining us today. We would now like to open the forum for questions.

Our first question comes from Andreas Bokkenheuser from UBS.

Just 2 quick questions from me. Number one, on Tia Maria, obviously, you mentioned there's been some progress there at the end of the third quarter. Can you just talk a little bit about what the next kind of milestones are over the next 3 to 6 months? Are there any dates we should be looking after for any signposts and kind of also how you're thinking about the political environment in Peru regarding developing Tia Maria? So that's the first question. I'm sorry, could you just clarify one second question on the by-products. Sorry, did you say that cost before by-products went up? Or did they go down? I missed that.

Thank you, Andreas. Okay. On the Tia Maria, well, we do have all the permits now. So the next step will be to initiate the construction. That will be the basic next step that we're expecting to move on. In terms of the political environment, well, Peru is approaching elections, which will be on April 11 of next year. Obviously, when there are elections at the site, usually that makes it a little bit harder to initiate new projects. And we are certainly considering that as part of our current outlook for the project. Regarding the by-products, well, we have indicated at the press release a reduction in our cash costs when compared to the third quarter of 2019. It was $0.82 in the third quarter of 2019, and it's been $0.65, that's a 21.7% reduction year-on-year. Quarter-on-quarter, we had a slight variance, an increase, and that was the one that I mentioned in my report today. So before by-product credits, we have $1.36 per pound in this quarter, which was a little bit higher than the second quarter of 2020 cash cost by $0.092. I hope that this clarifies your concern.

Yes. No, that's very clear. Just a follow-up there. The reason for the slightly higher cost before by-products, what was that, again, sorry?

Yes. The reason is that in the second quarter, in particular, we had to slow down our operations quite significantly. In the third quarter, we are recuperating the pace, not only in terms of mine material but also in some other operations. For instance, certain maintenance that was postponed in the second quarter was tackled in the third one. So that's why we had a slight increase in our cash cost, still very good cash cost, by the way, but slightly higher than before by-product credits, the increase was from about $1.27 to $1.36 per ton before credits.

Our next question comes from the line of Thiago Lofiego from Bradesco BBI.

Raul, I have two questions for me. First one on the dividends. Is there a chance that we see a higher dividend payout in the coming quarters or maybe year while you don't have a final decision on the growth projects, I mean, the significant growth projects like Tia Maria or eventually if you go forward for another one? And then the second question is related to that as well. So Tia Maria, I understand you guys are doing a lot of things there, the ESG study. But just to understand, if this takes longer to become a reality, would you consider going for El Arco first? Or this is not in the cards for you?

On dividends, the Board has raised the dividend from $0.40, which was announced in July, to $0.50 this past October 22. The decision on the dividend is made at each Board meeting. The company has a strong history of returning any excess cash to shareholders, which has been the practice for some time. However, this will be evaluated continuously by the Board members. Currently, pricing for our products, aside from molybdenum, is quite favorable. Unfortunately, the price of molybdenum has fallen from about $12 per pound last year to close to $8 per pound, representing a one-third decline in value. On the other hand, prices for copper have significantly improved, as have silver and gold, while zinc prices have remained stable. As long as the company has available cash, the Board will consider whether to pay a dividend. Regarding the Tia Maria project, it required specific tasks to be completed. At this point, Tia Maria is finished from our end and has completed all permitting, and we have been engaging in successful social initiatives in the area. We will proceed with it. For El Arco, it has begun the process of obtaining the environmental impact assessment and is acquiring the necessary land. There are steps that must be followed to advance the project. I believe these two projects can progress simultaneously when they are ready, and the company will allocate resources accordingly.

That's good, Raul. And just a follow-up here. In terms of projects that are more mature or less mature beyond Tia Maria, which ones do you see that are closer to being more mature anyway? So would it be El Arco, Michiquillay, what would be the order there?

We are currently reporting on our Mexican operations, specifically Pilares and the new zinc concentrators, which are in development alongside Tia Maria. Additionally, we have greenfield projects in Mexico and Peru, with Tia Maria being the focus in Peru. Various projects are nearing completion, with Los Chancas well advanced and Michiquillay progressing positively. We believe these projects are moving forward at the right pace. In Mexico, we also have another greenfield project, El Arco, which I previously mentioned.

Our next question comes from the line of Jon Brandt from HSBC.

I wanted to clarify something you mentioned earlier. Did you say that in Peru, around 65% to 70% of the workforce is back on the job? I'm curious about what the remaining 30% are doing and if this will have any repercussions. It seems like it could affect operations like stripping. Will we notice an impact on production over the next couple of years? Additionally, I wanted to ask about the production versus sales volume figures. Last quarter, you indicated that destocking was nearly complete, but it looks like inventory has decreased again, and sales volumes exceeded production once more this quarter. Are we now at a normalized inventory level, or should we anticipate further improvements in working capital?

Thank you for your questions, Jon. In regard to our workforce in Peru, we currently have some employees who are not returning to work due to health restrictions. This scenario is more prevalent in Peru compared to Mexico, which is why only 65% of our workforce is currently operating. We are in the process of recalling these employees, but it is progressing slowly. We aim to have most of our Peruvian workforce back in the next few weeks. Concerning production and sales, we anticipate a strong alignment between the two. There were issues at the Ilo port towards the end of the second quarter that prevented us from shipping all our material, but we have worked to address that, and it has positively impacted our sales volumes this past quarter. We believe our inventory levels are now normalized, and we expect to maintain a close relationship between production and sales moving forward.

Great. I would like to follow up on the labor side. We have encountered some issues in Chile with strikes and challenges at MMG. Could you share your thoughts on your overall relationship with the unions and the communities in both Peru and Mexico?

Certainly. In Peru, we signed three-year labor contracts with most of our unions last year, with one having a slightly different timeline, but we do have a contract with them as well. Therefore, we don't see this as a problem and do not anticipate any issues. In Mexico, the situation is different regarding salary discussions, but so far, we haven't encountered any problems with our labor force there. Overall, I believe we are in a stable position. As you might expect, many people are quite worried about the challenges posed by the COVID pandemic in both Mexico and Peru, so labor discipline remains very strong in the countries where we operate.

Our next question comes from the line of Jens Spiess from Morgan Stanley.

Just wanted to ask how much you still have to do in terms of stripping and how that will impact costs before by-products going forward? And in that sense, if you could provide an updated guidance for upcoming years? And also, do you have any notion of how much your tax flow will be affected if Congress passes the nondeductibility of royalties in Mexico?

I'm sorry, I couldn't understand your second question, Jens.

Yes. In Congress, there's apparently a proposal for the upcoming budget next year. Mining royalties will no longer be deductible from the income tax. So I was wondering if you already have an assessment of what's the impact on your tax bill for that.

You mean on the Mexican tax legislation?

Correct.

We reported a slight increase in our cash cost before by-product credits. Currently, we expect a cash cost of about $0.70 for this year, which may remain the same or increase slightly depending on how much maintenance we can complete in the fourth quarter. Looking ahead to 2021, we anticipate catching up on maintenance expenditures, some of which will involve more contractor work. Our current outlook suggests a cash cost of approximately $1 next year, followed by $0.98 in 2022 and $0.94 in 2023. It's important to note that the production from our new projects in Mexico will be included in these projections. In 2022, we expect the Pilares operation to produce around 30,000 to 35,000 tons annually. By 2023, we will also have production from El Pilar and the Buenavista zinc operation, which should enhance our production and cost profile. Regarding the proposal in the Mexican Congress, we prefer not to speculate at this stage. Once a firm decision is made, we will provide an assessment of its impact. Right now, we don't believe it's appropriate to discuss potential effects since it remains largely speculative.

Okay. And could you maybe repeat the cash cost guidance before including the deduction of by-products?

For next year or for now?

Yes. So this year and next year, preferably.

Okay. For this year, we are expecting $1.35 before credits. And for next year, $1.64. By the way, this quarter, we are usually doing a major review of the outlook for the company. So it may vary a little bit when we report our view of the operations in the next quarter, in January.

Our next question comes from the line of Leopoldo Silva from LarrainVial.

So I have a first question regarding your growth projects. I see in the Los Chancas CapEx guidance that you have reduced it by $200 million. What is the explanation for that? And then I have a follow-up.

Sure. In the case of Los Chancas, we have conducted a thorough review of the project. As a result, we have altered the long-term mining plan. Consequently, we will be performing less stripping, which will affect the project's capital expenditures since it will need less equipment at the start of the investment as well as for pre-stripping. These two factors primarily account for the reduction in capital expenditures for the project.

Great. Very clear. And my second question is regarding your steady state after building all these projects in Peru and Mexico. How much should your sustaining CapEx reach after all of these operations are up and running?

Well, currently, we have a sustaining capital that's in the range of $500 million per year. Obviously, and that's considering the current production capacity. Once we finish our projects, which will mean that we will be producing almost 1.8 million tons of copper, that will be our capacity. Then we should expect a much higher maintenance CapEx. Well, for a while, it will not pressure our equipment or expenditures because new equipment usually requires less maintenance for a while, and then you will initiate a routine of maintenance. For now, we believe that, that should be around $750 million for the long run. But that's something that we will be reviewing as we move into 2028 when we believe we will be operating all the projects at full capacity.

Okay. So on a per-ton basis, it should be relatively the same after the initial years?

Yes, that's a fair assumption.

Okay. You've mentioned plans to allocate $500 million annually for CapEx. Initially, this year's CapEx was projected at $1.1 billion, correct? I understand you've revised it down to $800 million, but what about the $600 million difference related to your sustaining CapEx? Where was that amount intended to go at the start of the year?

We are rescheduling our plans. This year, we had an initial budget that was significantly higher than what we now expect to spend. We are adjusting our capital expenditure for 2020 to approximately $650 million. This includes some maintenance capital expenditures that we haven't been able to execute. We will not spend what we anticipated for maintenance capital expenditures due to the reasons I mentioned. Some capital-related activities cannot take place. For example, travel to assess equipment in another country has been restricted, preventing us from visiting the location of the equipment we intend to purchase. Therefore, we have to delay certain expenditures for various technical and sanitary reasons. We have been continually reducing our capital expenditures throughout this year. At this time, we are not altering our perspective on the projects or the maintenance capital expenditures that need to be undertaken. Regardless, we are deferring some of the expenses. The funds that remain unspent in 2020 will be allocated to the following years, starting from 2021.

Our next question comes from the line of Jean Bruny from BBVA.

Congratulations for the results. Maybe 2 quick ones for me. The first one on molybdenum...

Could you move a little closer to the microphone?

Sure. Sure. Can you hear me better now?

Sure.

Is it better?

Yes.

Sorry about that. Just 2 quick ones for me. The first one on molybdenum. We have seen all prices of metals trading up after the first quarter but for molybdenum. Maybe what's your view on that? And the second one on the copper market. I understand you're optimistic. Maybe what's your take as well on the dynamic, especially on the supply side? How much capacity do you think is currently you're seeing less due to COVID? And what's your take as well on the demand side? I understand that you're seeing a very strong demand from China. Can you update on the other part of the world?

I understand your second question. For the first one, I didn't quite catch what you said, so let me focus on that and then we'll address your second question. Currently, we are observing a decline in both demand and supply. This situation, driven by the COVID-19 crisis, represents a unique economic challenge for copper that differs from past experiences. Typically, during market turmoil that impacts global economic growth, we see demand drop while supply remains relatively stable. Supply adjustments would follow later due to significantly lower prices, prompting the closure of high-cost operations, which helps the market seek equilibrium, as seen during the 2008-2009 recession when we also experienced lower demand alongside lower supply. In this instance, however, due to COVID's effect on various copper producers, we are witnessing a simultaneous decrease in both supply and demand, resulting in much lower levels for both. Our commercial team projects a demand drop of about 700,000 tons in 2020, with supply down approximately 350,000 tons. Furthermore, there are factors supporting copper prices. The liquidity provided by central banks, particularly the European Central Bank and the Fed, is helping to sustain economic activities and metal prices. Additionally, concerns surrounding labor negotiations in Chile are impacting around 50% of the country's supply over the next year. On the demand side, we are seeing a robust recovery from China and other Asian economies requiring copper, which leads to a positive outlook for the upcoming year. This is why we have an optimistic view on copper prices. Could you please share your second concern?

Yes, sure. Just one quick question.

It appears that his line has disconnected.

Our next question comes from the line of Rodolfo De Angele from JPMorgan.

I guess we already discussed a lot. So I just wanted to confirm the numbers of your expectations for production of both copper and moly into next year that you mentioned in your opening remarks. I'm not sure I got it right. Can you repeat, please? And that's all for me.

Certainly. Good talking to you, Rodolfo. For copper, we're expecting 996,500 tons; for molybdenum, 29,400 tons.

Our next question comes from the line of Rodrigo Garcilazo from GBM.

I have just a quick clarification. In the last conference call, you mentioned that you were expecting to have higher costs of about $170 million due to postponed maintenance and stripping costs and that, that amount will be spread out in the next three quarters. So considering your higher cash cost expectations for next year, the question is, did you move a big chunk of these additional costs through 2021 and by how much? That's the first one.

Okay. Well, we already commented on that, and we're following a plan to catch up on all the maintenance and some other activities that we had to postpone due to the pandemic. A portion of that has been already absorbed by our operations and will be the case for now and at least two quarters of next year. At the same time, we're seeing certain synergies that we're getting by finding different ways to do what we are doing now. And that results in some saving opportunities that were foreseen for the future. We will report on that when we have more clarity. But at this point, the plan is to do the maintenance that we have postponed and try to be as efficient as we can by addressing these different works in the next few quarters.

The next question is a quick follow-up regarding the Peruvian workforce. Could you mention the effects in terms of cost and production once all the workforce returns in the next few weeks, please, in Peru?

Well, they have been paid, so we never stopped paying them. The Peruvian legislation, in this case, asked for them to recuperate the time that they have not been working. So we're developing a plan, so they can pay back that time. That's one thing. The other one is that we have incurred in certain expenditures related to this situation; we have to pay some extra labor time. It was, relatively speaking, a small amount of $16 million that we have to spend in our operations due to COVID-19 labor and production inconveniences. So most of it is for extra labor for the ones that could work at the premises of the company. The ones that are not working will have to pay back the salaries that they have received, and there are different ways that they can do that. And that's following the Peruvian legislation regarding this matter.

Our next question comes from the line of Rodrigo Salazar from AM Advisors.

Just one question from my side. If you could give us an update on CapEx. With these changes on payments, what do you expect for next year on CapEx? And how much of that is maintenance?

Certainly. Let me follow in a second, please. Okay. For next year, we are expecting to spend $1.4 billion; for 2022, $1.8 billion; and 2023, $2.2 billion; and for 2024, $2.9 billion. So basically, we're rescheduling our expenses. The ones that we are not exercising this year have a cascading effect of rescheduling expenditures for CapEx.

Okay. And how much of that is maintenance for next year, out of the $1.4 billion?

There are certain expenses related to equipment acquisition, for which we have already placed purchase orders. Specifically, around $70 million will be allocated for the new concentrator at Buenavista. The amounts will vary depending on the different projects, which are not specified in this instance.

Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to management for closing remarks.

Okay. The gentleman who disconnected has emailed us with a question about the molybdenum market. He is asking why the price of molybdenum is the only one that is decreasing. This is a question we also consider. The primary reason is the excess supply in the market. Molybdenum is linked to certain industries that are not currently favored, such as airplane manufacturing, which uses molybdenum in the stainless steel alloys. With that, we conclude our conference call for today. We appreciate your participation and look forward to having you with us when we report for the fourth quarter of this year and the full year 2020. Thank you very much, and have a nice day.

Ladies and gentlemen, this concludes today's conference call. Thanks for participating. You may now disconnect.