Southern Peru Copper Shareholders Elect Directors; Hear Recap of 1997 Accomplishments.

NEW YORK--(BUSINESS WIRE)--April 30, 1998--Southern Peru Copper Corporation (SPCC) "had another excellent year in 1997 with increased copper production, enhanced operating efficiency, good progress on its $1 billion expansion and modernization program, sale of the Ilo power plant and implementation of a new cost reduction program," according to SPCC President and Chief Executive Officer Charles G. Preble who addressed shareholders at SPCC's annual meeting here today. Mr. Preble also announced a new project to expand SX/EW production by 26%.

At the meeting, common stockholders of SPCC elected Ambassador Everett E. Briggs, president and CEO of the Americas Society and the Council of the Americas, and John F. McGillicuddy, retired chairman of the board and chief executive officer of Chemical Banking Corporation, to represent them for one-year terms. Common shareholders have a 17.8% interest in SPCC.

Elected directors by the Class A Common Stockholders were Richard de J. Osborne, Kevin R. Morano, Augustus B. Kinsolving, Jaime Claro, Francis R. McAllister, Robert J. Muth, Robert M. Novotny, Michael O. Varner, David B. Woodbury, Robert A. Pritzker, Douglas C. Yearley, J. Steven Whisler and Charles G. Preble. Class A Common Stock is held by the founding shareholders of SPCC. ASARCO Incorporated holds 54.3%, a subsidiary of the Marmon Corporation, 14.2% and Phelps Dodge Overseas Trading Company, 13.9%.

Coopers & Lybrand L.L.P. was elected to serve as independent auditors for the Company.

The Company today declared a dividend of 8 cents per common share payable June 3, 1998 to shareholders of record at the close of business on May 18, 1998. The Company's policy is to pay 50% of earnings as dividends and thus dividends will vary with reported earnings each quarter.

Production Increases

According to Mr. Preble, the Company s SX/EW plant increased production by 5 million pounds in 1997. In its first full year of operation in 1996, the new plant surpassed design production rates to produce over 90 million pounds of low-cost electrowon copper, increasing SPCC s total copper production by 15%.

SPCC's board of directors has approved an expansion of the SX/EW plant which will add 26 million pounds of SX/EW production annually. The expanded plant will produce 124 million pounds of electrowon cathode per year at a cost of less than 40 cents per pound. The capital cost of the project is $45 million and it will be completed by the end of 1999.

Copper mined at SPCC's Toquepala and Cuajone mines in southern Peru increased 8 million pounds in 1997 over 1996 due to higher operating rates. Production at SPCC's Ilo smelter improved over 1996 levels and refinery production increased by 15% on top of the 20% increase in 1996. Silver production remained constant and molybdenum production increased by 700,000 pounds during the year. Preble said production improvements were achieved despite difficult operating conditions, especially early in the year, caused by the El Nino weather phenomenon.

Enhanced Operating Efficiencies

"Southern Peru made a number of operational improvements in 1997," Mr. Preble said, "replacing older, less efficient 120-ton trucks with 15 new 240-ton trucks at the mines, and installing automated process controls and large capacity flotation cells at its concentrators and new cells and a new rectifer in its Ilo refinery tankhouse."

The Company's ore reserve position provides opportunities for future expansion. Reserves now total over 2.7 billion tons and give the Company 38 years of mine life at current production rates.

Preble said good progress was made in 1997 on the major new expansion of the Cuajone mine and the modernization of the Ilo smelter which will expand mined copper production and increase the sulfur recapture rate. Preble said the expansion is planned in three separate stages.

The first stage involves a 50% expansion of the mining capacity at the Cuajone mine, which will increase SPCC s mined copper output by 130 million pounds per year, or 19% of SPCC s total production. This stage of the project, which is expected to cost $245 million, mainly for new mining equipment and a concentrator expansion, is expected to be completed by early 1999.

The second stage of the project involves modernization and expansion of the Ilo smelter. A two-phase modernization plan will greatly reduce the possibility of production disruptions. In the first phase, a new flash furnace and associated equipment will be installed by 2001. The existing reverbatory furnace will continue to operate during the installation until the flash furnace is operating at target levels.

Total cost of the smelter project is approximately $800 million. When completed, the Ilo plant will have a sulfur recapture rate comparable to other world-class smelters. SPCC completed financing in 1997 to support the expansion and modernization program and has $269 million in cash and marketable securities and an undrawn bank facility of $600 million. So far, SPCC has spent $114 million on the expansion project.

An optional third stage project at SPCC involves an additional expansion at the Cuajone mine and expansion of the Ilo smelter. At Cuajone, new mining equipment and a new semi-autogenous grinding mill would be added to increase copper mine production by another 240 million pounds, or 30%. The smelter expansion would involve modifying the existing Teniente converter, resulting in an increase to concentrate processing capacity of 1.75 million tons of concentrate per year.

When the third stage, which depends upon future copper prices and other factors, is undertaken, SPCC will produce, at the conclusion of the project, 930 million pounds of copper per year or 1.4 times the 1997 production level.

Cost-Reduction Program

Responding to lower copper prices, the Company has recently launched a company-wide cost reduction program. The program will include overhead reductions and operational improvements and will improve net earnings by $8.0 million, or 10 cents per share, in 1998 and by $18 million, or 22 cents per share annually, starting in 1999.

The Company completed the sale of its Ilo power plant to the Peruvian subsidiary of a Belgian independent power producer in 1997 for $33.6 million and a 20-year power supply agreement. The power company will provide capital needed to expand the Ilo power generating capacity to meet the needs of Southern Peru's expansion program.

Preble said the Company continues to be in a very strong financial condition. SPCC has $269.0 million in cash and marketable securities and $247.9 million in debt, with stockholder equity of more than $1 billion.

Earnings Improve

SPCC's 1997 net earnings were $185.7 million, or $2.32 per share, compared with $180.5 million in 1996, or $2.25 per share. Operating improvements, higher production and SPCC's price protection program offset much of the effect of a decline in metal prices late in the year. The Company's effective tax rate also was lower due to tax incentives arising from the expansion program at the Cuajone mine.

SPCC's sensitivity to changes in the price of copper is significant. Each one-cent change in the price of copper changes SPCC's earnings by 5.3 cents on an annual basis. Copper prices in 1997 averaged $1.03 per pound, compared with $1.04 per pound in 1996; molybdenum rose to $4.30 per pound in 1997 from $3.78 per pound in 1996 and silver fell to $4.88 per ounce in 1997 from $5.18 in 1996. The price of copper in the first quarter of 1998 was 77 cents per pound compared with $1.10 in the same quarter of 1997; silver was $1.23 higher and molybdenum decreased by 60 cents.

Earnings in the first quarter of 1998 were $12.9 million, or 16 cents per common share, compared with earnings of $55.8 million for the first quarter of 1997, or 70 cents per share. Results for the first quarter of 1998 include a non-recurring, after-tax charge of $6.0 million for severance costs associated with the cost-reduction program.

SPCC is the largest mining company in Peru and one of the 10 largest private-sector copper mining companies in the world. It operates two mines, a smelter and a refinery in the southern region of Peru.

CONTACT: Jerry Cooper, Corporate Communications,

ASARCO Incorporated,

212-510-1810