Investor Letter to Grupo Mexico

On March 5, 2021 the following letter was sent to the Chairman of the Board of Directors of Grupo México.

Click here to download this letter as a PDF.

Germán Larrea Mota-Velasco 
Chairman of the Board of Directors 

Grupo México 
Campos Elíseos 400 
Col. Lomas de Chapultepec 
Delegación Miguel Hidalgo 
Ciudad de México, C.P. 11000 México 

Southern Copper Corporation 
1440 E. Missouri Avenue, Suite 160 
Phoenix, AZ 85014 USA 

Dear Mr. Larrea:

We are writing to you as investors regarding the environmental, social and governance practices of Grupo México S.A.B, de C.V. (“Grupo México”) and its majority-owned subsidiary Southern Copper Corporation (“Southern Copper”). As described below, we are concerned regarding the sustainability of Grupo México and Southern Copper’s business practices. We respectfully request an opportunity to engage in a dialogue with the appropriate company representatives to address the concerns outlined below.

Environmental Concerns

As you are aware, Grupo México and Southern Copper face significant environmental risks in their operations. In 2019, Grupo México’s port facility in Guaymas, Sonora spilled sulfuric acid into the Sea of Cortez and Mexico’s Federal Prosecutor for Environmental Protection ordered the facility to close temporarily. In response to the Sea of Cortez spill, Mexico’s Ministry of Environment and Natural Resources announced that it was investigating 22 environmental accidents that had been attributed to Grupo México over several years. 

The 2014 Buenavista del Cobre mine spill of toxic chemicals into the Sonora and Bacanuchi rivers was described as “the worst natural disaster provoked by the mining industry in the modern history of Mexico” by Mexican Environment Minister Juan José Guerra Abudas. According to a 2017 working group report of the United Nation’s Human Rights Council, local authorities had raised concerns that Grupo México’s commitments after the spill to build water treatment plants and a health clinic had not been fulfilled. In 2018, the Supreme Court of Mexico ruled that local communities need to be consulted regarding Southern Copper’s construction of a new mine tailings dam in the same area. And in 2020, the Supreme Court of Mexico ruled that the trust created to compensate victims of the spill needed to be reopened.

There have been significant environmental problems in the U.S. as well. In 2009, Grupo México’s U.S. subsidiary ASARCO paid $1.79 billion USD as part of the largest environmental bankruptcy in U.S. history to settle claims by the U.S. Environmental Protection Agency (“EPA”) for hazardous waste pollution at more than 80 sites. In 2015, the U.S. Department of Justice and the EPA reached a settlement with ASARCO to pay a $4.5 million USD civil penalty and spend $150 million USD to improve its pollution control technology at its Hayden, Arizona smelter. In March 2020, the EPA fined ASARCO $33,000 USD for 33 violations of the fugitive dust control plan that had been required by the 2015 settlement.

Social Concerns 

Grupo México and Southern Copper also face social risks in the treatment of their workforces, communities and respect for labor rights. Last September, Grupo México reached an agreement with President López Obrador to allow the recovery of the bodies of 63 miners who had perished in the 2006 Pasta de Conchos coal mine collapse. President López Obrador has also pledged to seek to resolve a 13-year-old strike by members of the National Union of Mine, Metal, Steel and Related Workers of the Mexican Republic (“Los Mineros”) at Southern Copper’s Taxco mine.

Southern Copper’s mining operations in Peru have been the focus of community protests. Southern Copper had paused development of the Tia Maria mine in Peru after protestors were killed by state security forces in 2015 and in 2011. In 2019, local communities again protested the reopening of the Tia Maria mine, citing concerns about the mine’s impact on local crops and water supplies. On Southern Copper’s 3Q 2020 earnings call, the company disclosed that it has “received the results of a review of the social environment in the Tia Maria project, which was conducted by a global leader in environmental, social and government assessments.” In January 2021, human rights groups denounced the conviction of two of the 2015 protest leaders.

Grupo Mexico’s U.S. operations have also raised labor rights concerns. In 2016, the United Steelworkers Union and Los Mineros filed a complaint with the U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises. The complaint alleged that Grupo México’s U.S. subsidiary ASARCO had violated the OECD Guidelines by engaging in conduct designed to avoid reaching a collective bargaining agreement. After determining that the allegations merited further consideration, the U.S. National Contact Point offered mediation to the parties but Grupo México refused to participate.

Most recently on January 7, 2021, Region 28 of the U.S. National Labor Relations Board issued a third consolidated complaint against Grupo México’s subsidiary ASARCO. The complaint alleges that ASARCO engaged in various unfair labor practices that resulted in a 2019 strike against the company. In July 2020, the strike ended but ASARCO allegedly refused to reinstate the striking employees. A hearing has been scheduled for June 2021 before an administrative law judge to review evidence against ASARCO for allegedly violating U.S. labor law.

Governance Concerns

Shareholders also have corporate governance concerns regarding Grupo México and Southern Copper. Last year, the proxy advisory firm Institutional Shareholder Services (“ISS”) recommended a vote against Grupo México’s directors for failing to disclose the names of the director nominees and bundling the election of directors into a single voting item. ISS also recommended a vote against Southern Copper’s directors citing a lack of gender diversity, poor meeting attendance by a director, and non-independent directors on key board committees.

Four of Southern Copper’s directors are Grupo México executives including you who serve as chairman of both companies. As a controlled company of Grupo México, Southern Copper has exempted itself from the NYSE corporate governance rules requiring a majority of independent directors and independent compensation, nominating and corporate governance committees. The United Steelworkers Union has submitted a shareholder proposal for the 2021 annual meeting of Southern Copper recommending the appointment of an independent board chair.

We believe that strong corporate governance is important for shareholders because Southern Copper has various related party transactions with Grupo México that are potential conflicts of interest. In 2019, a derivative lawsuit filed by a shareholder on behalf of Southern Copper alleged that certain related party transactions between the two companies were not approved by a committee of independent directors. While the lawsuit was recently dismissed for lack of personal jurisdiction, the merits of the allegations were not adjudicated.


We believe that these environmental, social and governance concerns are shared by many public shareholders of Grupo México and Southern Copper. We urge you to address these concerns and would welcome the opportunity to have a discussion with the appropriate company representatives. Please direct your response to Brandon Rees, Deputy Director of Corporations and Capital Markets, AFL-CIO at 815 16th St NW, Washington D.C. 20006, USA or / +1 202-637-5152 to arrange a mutually agreeable time. 


Brandon Rees 
Deputy Director, Corporations and Capital Markets 

Sandra Metoyer 
Head of Responsible Investments 
AP Pension 

Rosa van den Beemt 
Vice President, Responsible Investment Analyst 
BMO Global Asset Management 

Simiso Nzima 
Investment Director & Head of Corporate Governance 

Laura Krausa 
System Director Advocacy Programs 
CommonSpirit Health 

Sister Teresa George, D.C. 
Provincial Treasurer 
Daughters of Charity, Province of St. Louise 

Carlos Moreno 
Fondo de Pensiones para afiliados de CCOO 

Sam Jones 
Heartland Initiative, Inc. 

Jules Mort 
Portfolio Manager 
Hosking Partners LLP 

Mary Beth Gallagher 
Executive Director 
Investor Advocates for Social Justice 

Iancu Daramus 
Senior Sustainability Analyst 
Legal & General Investment Management 

Richard Solly 
London Mining Network 

Cathy Rowan 
Corporate Responsibility Coordinator 
Maryknoll Sisters 

Pat Zerega 
Senior Director of Shareholder Advocacy 
Mercy Investment Services, Inc. 

Scott M. Stringer 
New York City Comptroller 
New York City Pension Funds 

Rev. Séamus P. Finn O.M.I. 
JPIC Director 
OIP Investment Trust 

Florentine van den Eerenbeemt 
Responsible Investment Specialist 

Henry Beck 
Maine State Treasurer 
Office of the State Treasurer 

Cristina Cedillo 
Engagement Specialist 

Sister Barbara Aires 
Coordinator of Corporate Responsibility 
Sisters of Charity of Saint Elizabeth 

Sister Ann Kasparek 
Justice Coordinator for Investments 
Sisters of Mary Reparatrix 

Sister Nora Nash 
Director Corporate Social Responsibility 
Sisters of St. Francis of Philadelphia 

Bill Davis 
Managing Director 
Stance Capital, LLC 

Rocchino Contangelo 
Head of Global ESG-integrated Research 
Swisscanto Invest 

Pat Miguel Tomaino 
Director of Socially Responsible Investing 
Zevin Asset Management