100th anniversary of the discovery of the Flin Flon deposit
Hudbay understands every phase of the mining cycle. Founded in 1927, the Company has benefited from and endured every opportunity and challenge this industry can present. Between 2010 and 2015, we met the test of simultaneously developing what are now three outstanding mines. Today, our low-cost metals production and growth potential position us for continued success as a solid investment and a reliable partner everywhere we operate.
1. Based on 2015 annual gross revenue before deduction of treatment and refining charges and pre-production revenue and including unrealized gains and losses related to non-hedge derivative contracts.
In underground mines, like Hudbay’s Reed operation in northern Manitoba, wire-mesh screens are bolted to the walls and ceiling to help prevent rock falls and cave-ins. The screens are held in place by plates, attached by lengths of rebar. Mining activities like underground blasting can lead to rocks falling or shifting behind the screens, which causes them to bend outward or “bag”. To minimize “bagging” at Reed, the rebar securing the plates is driven into the rock face in a pattern like the “five” side on a die. It’s effective, but expensive, with each length of rebar costing approximately C$14. After thorough research and testing, miners at Reed determined they could use a mechanical bolt instead of a longer piece of rebar for the centre, while still employing the “five” dice pattern that had been so effective. This one change will translate into annual savings of C$180,000 while maintaining our high safety standards. It’s a perfect example of continuous improvement at work, and has since been implemented at Hudbay’s 777 mine as well.
Overall, continuous improvement and cost optimization initiatives contributed to more than C$4 million in savings in 2015, while maintaining or improving our operating standards. Additional savings of C$15 million in the Manitoba operations are planned in 2016.Close
Through enviable performance, the team at Constancia ramped up to full production far more quickly than anticipated. During the same period, the Peru Ministry of Transportation was carrying out a major construction program that closed off traffic for seven hours per day on a 60-kilometre section of the 470-kilometre route from the mine to the port at Matarani. Consequently, a backlog of copper concentrate built up at the site in the fall of 2015. To reduce the backlog, a much larger fleet of trucks and drivers was needed to get concentrate to the port. Transport companies across Peru were contracted, and a team of contractors and subcontractors was soon assembled. However, it became clear that work needed to be done to ensure that the new drivers understood and acted in accordance with Hudbay’s safety expectations.
Experienced instructors were hired to provide training, verify skills and periodically assess driver performance. The drivers were educated in the principles of defensive driving, including self-monitoring for fatigue and aggressive driving. We added control points for checking driver compliance and allowing drivers to rest if tired. Trucks were linked to a GPS monitoring system that tracked location as well as driving speed. We also explored alternative routes to bypass road construction, but these secondary roads through the Andes proved unsuitable for the safe operation of transport trucks.
Although Hudbay represented less than one-third of the heavy truck traffic on most of the route, more communities took notice of our operations, particularly on the unpaved sections of the route, as the number of trips increased. Constancia’s community relations team contacted local leaders, held public meetings, informed people about routes and timing, and explained measures put in place to mitigate the impact of increased traffic (like watering gravel roads to control dust).
To provide further opportunities for local communities to benefit economically from our move into operations, we also worked with committees for development in Uchucarco and Chilloroya to help them purchase 25 trucks, which they could rent to contractors hauling Constancia concentrate to Matarani.
Through our efforts to increase transportation capacity and safety, all of the excess concentrate inventory was moved to port and sold by the end of 2015.Close
Hudbay has a lot of experience in building close ties with the communities near our mining operations – we’ve been doing it for almost 100 years. In 2014, we acquired the Rosemont project. Located in Pima County, Arizona, approximately 50 miles (80 kilometres) southwest of Tucson, Rosemont has the potential to be one of the largest copper mines in the US. Soon after the acquisition was completed, the head of our Arizona Business Unit, Pat Merrin, moved to Tucson with his family, and worked to demonstrate that Hudbay is committed to building the right mine, the right way, and that good community relations are an essential part of that vision.
While Rosemont is still in the permitting phase, we’ve had a team on the ground for two years, and have hired local people for a number of key roles. We’ve also put in place a community relations (CR) strategic plan with a stated mission to build meaningful relationships with stakeholders based on integrity and mutual respect. Our efforts in this area range from detailed protocols for CR and government relations; building local relationships through engagement initiatives, such as site tours; implementing a robust corporate contributions program; and doing simple things, like financially supporting and taking part in local events.
We hope to complete permitting in 2016. Once the construction phase of the project is initiated, business unit lead Pat Merrin notes, “we need to build not just a profitable mine, but a good mine… one that people respect, trust and see as a valuable addition to their community.”Close