PERU MINING 2020 PERU MINING 2020

Covid-19 - Production and Exploration - Metal Prices - Social Issues Engineering & Construction - Technology and Digitalization - Services Dear Reader,

In 2019, investment into Peru’s mining industry to the tune of US$6.15 billion, an increase of over 21% from 2018 and the highest mark since 2015, had cre- ated a climate of optimism moving into 2020, despite the sector wrestling with social conflicts and cumbersome bureaucracy. However, the Covid-19 wreck- ing ball and ensuing lockdown sent the sector into disarray, as the unprec- edented pandemic reduced operations to a bare minimum, taking months to return to full capacity.

In parallel to this, political turmoil in Peru amplified in 2020, reaching an un- expected climax on November 9, 2020, as President Martín Vizcarra was con- troversially ousted by Congress, against public opinion. The hope now is that Francisco Sagasti of the centrist Morado Party, sworn in as interim President to lead Peru until the April 2021 general election, will be able to restore a sem- blance of calm to a volatile political landscape.

Despite the unprecedented turbulence, the second half of 2020 brought renewed hope to the mining industry, as operations began to ramp up and companies adjusted to ‘the new normal’. Foundational to this improved out- look was a dramatic resurgence in metals prices, led by gold, which reached an all-time-high of over US$2,070/oz in August, and followed by silver, which traded close to the US$30/oz mark for the first time in seven years. Even more crucially for Peru, copper rebounded to its highest point since June 2018, trad- ing over US$3.15/lb on the back of robust Chinese demand.

The pandemic has also accelerated the implementation of new technologies at mine sites, as remote work, automation and mechanization suddenly be- came crucial in minimizing person-to-person contact and conforming to strict- er sanitary protocols. Furthermore, the downturn after the super-cycle in 2011 had forced mining companies to modernize operations and become leaner, leaving them well prepared to weather the Covid storm.

To cover these topics and provide a comprehensive guide to the different companies involved in Peru’s mining value chain, Global Business Reports has renewed its strategic partnership with the Chamber of Commerce Canada- Peru (CCCP). CCCP is the country’s leading binational mining chamber, which promotes commercial relations and investment and is in charge of organizing the Peruvian presence every year at the PDAC Convention in Toronto. The result of this collaboration is the production and distribution of ‘Industry Ex- plorations - Peru Mining 2020’, an up-to-date review of the current operations and projects and the latest trends in Peru's mining industry.

We would like to thank all of our interviewees for their time and collaboration. We also thank you for choosing Industry Explorations - Peru Mining 2020 as your source of information about Peru’s mining industry.

Carla Martínez Alfonso Tejerina General Manager General Manager and Director Chamber of Commerce Canada-Peru GBR Introduction COLOMBIA to Peru CONTENTS / Peru Mining 2020

GBR analyses Peru’s response to Covid-19 and how Peru’s resilient mining industry can help the economy rebound. Introduction to Peru Quito 8. Mining in the Shadow of Covid-19 68. Interviews with Mining Plus and Stantec 10. Interview with the Peruvian Institute of 69. Environment and Tailings Management 8-23 Mining Engineers 71. Interview with Amphos21 13. Interview with the National Society of 72. Interviews with Klohn Crippen Berger ECUADOR Mining, Petroleum and Energy and the Investor Mining and Tailings 16. Stimulating Peru’s Project Pipeline Safety Initiative 18. Interview with Anglo American 73. Construction, Assembly and Contractors Quellaveco 74. Interview with Ingeniería y Construcción 20. Interview with Bear Creek Mining Sigdo Koppers 21. Managing the Social Aspect 75. Interviews with STRACON and Pevoex 22. Interview with the International Council 76. Underground Mining Contractors Tumbes on Mining and Metals 78. Interview with AESA Iquitos 23. Interviews with the Lima Stock 79. Interview with Byrnecut Offshore TUMBES

Exchange and the Canada Peru Chamber 81. Interview with INCIMMET LORETO of Commerce 82. Interview with Robocon PERU MINING 2020 PIURA Industry Explorations Global Business Reports Piura Mining Production Equipment and Technology This research has been conducted by AMAZONAS Ben Cherrington, Alfonso Tejerina, Margarita Mining Todorova, Mariolga Guyon and Lucrezia Falcidia 26. Copper 86. Mining Equipment Moyobamba BRAZIL Chachapoyas 28. Interview with MMG-Las Bambas 87. Interview with Ferreyros LAMBAYEQUE Edited by Mungo Smith Production Graphic design by Gonzalo Da Cunha 29. Interview with Southern Copper 88. Interview with Komatsu-Mitsui CAJAMARCA Chiclayo 30. Interview with Southern Peaks Mining Maquinarias del Peru SAN Front cover inspired by the art of Olinda Silvano An overview of the main mining Cajamarca MARTÍN 33. Precious Metals 90. Interview with Liebherr A Global Business Reports Publication producers including interviews 34. Interview with Gold Fields 91. Interviews with Epiroc and IPESA LA LIBERTAD For updated industry news from our 36. Interview with Buenaventura 92. Construction and Auxiliary Equipment on-the-ground teams around the world, with MMG Las Bambas, Trujillo Pucallpa please visit our website at gbreports.com, Southern Copper, Buenaventura, 37. Interview with Hochschild Mining 93. Interviews with Scania, Volvo and subscribe to our newsletter by signing up 38. Zinc Divemotor to our VIP list through our website, Gold Fields, Nexa and others. or follow us on Twitter: @GBReports 39. Interview with Nexa Resources 94. Underground Equipment ÁNCASH 96. Interviews with Resemin and DSI HUÁNUCO Underground Huaraz Huánuco 26-39 97. Interview with Normet UCAYALI Junior Exploration 98. Equipment Components PASCO 99. Interview with Rexroth Cerro de Pasco 44. Junior Exploration 100. Comminution and Material Handling 46. Interview with Toronto Stock Exchange 101. Interview with Martin Engineering LIMA 47. The Issue of Permitting 102. Interviews with Metso, Weir Minerals JUNÍN 48. Copper and Tecnomina Lima MADRE DE DIOS 50. Interviews with Chakana Copper and 103. The Digital Mine Huancayo Callao Camino Corporation 105. Interview with Sitech CUSCO Peru Puerto Maldonado 51. Interview with Regulus Resources 106. Interviews with Siemens Peru and Huancavelica 52. Interview with Tinka Resources Emerson Automation Solutions International Boundary HUANCAVELICA Ayacucho 53. Zinc Province Boundary Cusco 54. Precious Metals 55. Interview with Kuya Silver National Capital Abancay Ica 56. Interview with Cerro de Pasco Resources Province Capital APURÍMAC Service Providers AYACUCHO 57. Lithium and Uranium ICA PUNO Junior 57. Interview with Plateau Energy Metals 110. Drilling Services N BOLIVIA 112. Interview with Geotek 113. Interview with AK Drilling Exploration 114. Blasting Technologies Titicaca AREQUIPA Puno Engineering, Construction 115. Interview with Orica Our guide to the most and Consultancies 116. Laboratories and Chemicals Arequipa 117. Interview with Certimin important juniors with active MOQUEGUA La Paz projects in the country, 60. Engineering, Construction and 118. Interviews with Quimtia and IXOM Consultancies 119. Outsourcing, Transportation and and the importance of Moquegua 61. Growth through Consolidation and Logistics TACNA stimulating exploration. South Innovation 120. Interview with Confipetrol Andina Tacna 62. Interview with WSP 121. The Benefits of Outsourcing Paci c 63. Interview with Ausenco Ocean 44-57 64. Local Players in the Market 65. Interview with BISA 66. Consultants have their Say CHILE 67. Interview with SRK Consulting

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INTRODUCTION TO PERU

"The mining sector contributes to between 10% and 15% of GDP, but its great importance is the macroeconomic stability it gives to the Peruvian economy. All of our external and fiscal accounts are heavily dependent on this. The mining industry accounts for 60% of Peru’s exports and more than 50% of overall foreign investment."

- Claudia Cooper, President, Lima Stock Exchange (BVL)

Image courtesy of Nexa Resources EDITORIAL Global Business Reports Industry Explorations

Peruvian copper production in July was Mining in the only down 2.2% compared with the same period a year earlier. Shadow of Covid-19 The government’s decisive stance to ensure the health and safety of its population is commendable consider- ing the country relied on only 200 ven- PERU NEEDS ITS MINING SECTOR TO tilators at the start of the pandemic. However, despite draconian lockdown FLOURISH AFTER THE DEVASTATION OF measures enforced by the government, THE PANDEMIC the challenge of social distancing in a country where 44% of households do not have a refrigerator (according to a 2018 government survey) has made flat- With the exception of political turbu- By early February, a Chinese dynamic Peruvian economy and leaving only es- tening the curve an uphill battle. lence – something the country has be- of a different kind conspired to send sential services running. Official cases rose above 900,000 in come accustomed to – 2019 was a year the red metal crashing to US$2.50/lb, Anglo American withdrew the majority September (the 12th highest in the world of relative stability for Peru. In contrast a 13% drop in reaction to the escalat- of its 15,000-strong workforce from its and 4th highest in South America), but to the social unrest and economic vola- ing Covid-19 outbreak, and a precur- Quellaveco project in mid-March, main- daily death rates that had plateaued to tility that upset some of its South Amer- sor to the free-fall in March, that saw taining only critical works, although around 200 per day from May to August ican counterparts, a stable currency copper dive to US$2.10/lb, its lowest CEO Mark Cutifani affirmed that the showed downward trend, averaging un- and strong fiscal balance sheet had point since 2016. In February, the sup- company still expects production to der 70 in October. positioned Peru for solid growth above ply chain had already been disrupted start in 2022. At sites already in produc- President Vizcarra was able to act quick- its modest 2.6% GDP appreciation rate as demand from China weakened and tion, such as Yanacocha (Peru’s largest ly due to Peru’s fiscal strength. Accord- in 2019. Mining investment that year to shipping companies became reluctant gold mine operated by Newmont), criti- ing to Bloomberg, the Andean country the tune of US$6.15 billion, the highest to expose workers to the virus, creating cal activity such as heap leaching and has accumulated savings in the past mark since 2015, continued to be the bottlenecks. environmental maintenance continued decade equal to about 15% of GDP, or cornerstone of Peru’s economic health, While the warning signs were there, few as operations scaled down. MMG de- 117 billion soles (US$34.4 billion). The with the industry accounting for over could have predicted the transforma- clared force majeure on copper con- theory was that the government could 60% of the country’s exports and over tional impact of what actually occurred. centrate supplies from its Las Bambas spend savings during the peak of the 50% of foreign investment. Despite a 10% drop in attendance and mine, followed by the company with- pandemic and tap into bond markets 2020 started on a positive note, as the the appearance of hand sanitizer at ex- drawing its 2020 production forecast when conditions became favorable. signing of a "phase one" trade agree- hibition booths, the mood at PDAC in for Las Bambas on April 13th. “The first While this intention was good, the se- ment between the US and China on Toronto from March 1st to 4th was up- quarter was very challenging for the vere lockdown combined with a spiral- January 15th pushed the price of cop- beat, buoyed by a large Peruvian del- entire business, but particularly for our ing virus outbreak had dire fiscal con- per to a nine-month high of US$2.88/lb. egation led by Minister of Energy and largest operation, Las Bambas,” reflect- sequences. A September report by Our Although cumbersome bureaucracy has Mines (MINEM) at the time, Susana ed Geoffrey Gao, MMG’s CEO. World in Data charted the Q2 economic threatened the country’s mining com- Vilca. Merely one week later, the World In the following months, several mi- decline across 38 countries, showing petitiveness, the development of large- Health Organization (WHO) would char- ning operations would report Covid-19 the percentage decline of GDP rela- scale copper projects Mina Justa and acterize Covid-19 as a global pandemic cases among their workers. A case in tive to the same quarter in 2019. Peru Quellaveco offered a near-term path to and, on March 15th, President Vizcarra point was Antamina, owned by BHP and was the worst affected country, with substantially increase the production of declared a country-wide stay-at-home Glencore, which reported 210 positive a contraction of 30.2%, in contrast to Peru’s biggest mineral export. order, effectively shutting down the cases of COVID-19 on April 27th. Wor- its neighbor and fellow mining power- ryingly, 87% of the positive cases were house, Chile, which declined by 13.7%. asymptomatic, an indication of how TOTAL MINING INVESTMENT IN PERU easily the virus can spread undetected. Source: MINEM As the first country in Latin America and Coordinating recovery through Billion US$ one of the first outside China to enforce political turmoil 10 a nationwide lockdown, Peru’s mining 9 industry felt the economic effects more “The lockdown on March 15th caught 8 acutely than other leading mineral pro- the mining industry by surprise,” stat- 7 6 ducers. From January to May, Peru saw ed Víctor Gobitz, president of the Pe- 5 4.2 copper production down by 22.6%, zinc ruvian Institute of Mining Engineers estimated 4 down 29%, lead down 33%, tin down (IIMP), who has recently taken over as 3 26.4%, gold down 32.8% and silver CEO of Antamina. Speaking of the strict 2 1 down 31.6%, according to MINEM fig- protocols to control people and cargo 0 ures. However, new minister of energy movement that have been necessary 2011 2012 2013 2014 2015 2016 2017 2018 2019 2019 and mines, Jaime Gálvez, revealed that to prevent the spread of infections at 11>> PERU MINING 2020 8 Industry Explorations Global Business Reports INTERVIEW Global Business Reports Industry Explorations EDITORIAL

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labor-intensive mine sites, Gobitz em- phasized the importance of protecting Víctor local communities, afraid of coronavirus reaching the high Andes. Gobitz Furthermore, the systemic decentraliza- tion of political power in recent years complicated an already daunting task. “The central government has been right to lead the process, but the highly frag- mented nature of the Peruvian adminis- President tration makes it very difficult to coordi- PERUVIAN INSTITUTE OF MINING ENGINEERS (IIMP) nate the right initiatives at the regional and local levels,” explained Gobitz. President Vizcarra’s decisive action in March drew widespread praise at first, but as the pandemic has worn on, the reaction has soured in some quarters. How is the state of emergency af- will see a consolidation period whereby big construction projects, agriculture “The government took way too long to fecting Peru and the mining industry mining operators will try to work with and the fishing industry should all come classify mining as a critical activity for in particular? less contractors. In any case, contrac- back to work in the coming months with the country. Argentina, where mining is From a health perspective, the crisis tors should be able to follow the same very strict safety protocols. If these not nearly as important to the economy caught Peru in a precarious situation, shift model as the mining operators industries fail to restart, the Peruvian as it is in Peru, decided to put the sec- as, at the beginning of the pandemic, themselves. State will be spending the resources ac- tor as a top priority and operations re- we only had 200 respirators; as of cumulated over the last three decades. started after one month, compared to mid-April there are 500 respirators in With mines shut down for a period of That needs to be taken into consider- three in Peru,” said Ignacio Bustamante, the country and around 143 are being one to two months in the best-case ation. president and CEO of Hochschild Mi- utilized. Additionally, we do not have scenario, how will companies try to ning, remarking that although Covid-19 enough Covid-19 tests, hence there is improve production once the state of How can the State protect its citizens is a very atypical situation, the signals not sufficient information available on emergency is lifted? considering the high levels of infor- and messages received from the gov- the main contagion trends. Every mine is different. In some cases, mality in Peru? ernment were not clear. The lockdown on March 15th caught you can modify your production plan to Just looking at the mining industry, On the other hand, Ricardo Porto, pres- the mining industry by surprise. The go to areas with higher grades. In oth- informal gold mining employs around ident and CEO of Nexa Resources Perú, sector presents its own peculiarity, with ers, if companies have excess capacity 500,000 heads of family, which is a very believes that the government made isolated camps where miners work and in their process plant and their mining large number. It has continued to oper- clear what was expected from a health live on shifts that are typically 14 days fleet, they will probably push for higher ate during this crisis. Only by increasing and safety standpoint at an early stage. long, with seven days off. To adapt to volumes. I believe all players will do ev- productivity will these people be per- “I would say that hindsight is 20/20, and the pandemic, these shifts could be ex- erything they can to make up for the suaded to join the formal system. If we it is easy to look back and suggest what tended to 30 days of work and 15 days lost time. achieve that, formalization will create a could have been done better,” he re- off, or to even longer periods like in virtuous circle, as these miners will have flected. “In my opinion, by prioritizing the 1990s, if the mining workers agree. The Peruvian government was access to credit, they will be able to buy the health of its citizens, the Peruvian Extended shifts will be the new norm praised for tackling the pandemic new equipment and develop as entre- government acted correctly,” conclud- when the industry reopens during 2020, quickly. How can a balance be made preneurs. ed Porto. with a very strict protocol to control between public health and economic While industry opinions differ on how people and cargo movement. The local policies? Will this crisis accelerate the intro- the government could or should have communities are afraid of coronavirus Certainly, this situation is new for ev- duction of new technologies to in- responded to the pandemic, there is reaching the High Andes, so we need erybody, so, while we are all making crease automation? consensus that for Peru to fulfill its geo- to assure their safety as well. mistakes, we should not be criticizing. At this moment, people are our first logical potential and become a more The central government has been right priority; the second priority is keeping competitive mining jurisdiction, greater Would it be very difficult to extend to lead the process, but the highly frag- the essential care and maintenance on political stability is surely required. At these protocols to all suppliers and mented nature of the Peruvian adminis- our sites; the third priority will be to re- the time of writing (November 2020), contractors? tration makes it very difficult to coordi- start mining operations. Only when we Peru has had five ministers of energy The mining industry cannot operate as nate the right initiatives at the regional have a stable operation can we look at and mines in the calendar year. a fully isolated entity. On top of energy and local levels. new technology and efficiency mea- On February 13th, Susana Vilca re- supply, it needs cement, chemical re- Peru has kept macroeconomic consis- sures. Right now, I do not think it is the placed Juan Carlos Liu, after it was agents, explosives and many other el- tency over the last 20 to 30 years, so right moment to incorporate disruptive revealed that Liu’s previous company, ements; while the final product, be it from a financial perspective we have a changes that would involve big job loss- CONASAC, had provided consulting concentrate or cathodes and needs to more solid position than 30 years ago. es. The adoption of new technology will services to Odebrecht, the construction be sent out to the markets. I think we Having said that, mining operations, have to happen step by step. ■ company embroiled in the Car Wash

PERU MINING 2020 10 Industry Explorations Global Business Reports 11 PERU MINING 2020 EDITORIAL Global Business Reports Industry Explorations INTERVIEW

PERU CONFIRMED COVID CASES (UNTIL NOVEMBER 9TH, 2020) Source: World Health Organization What is SNMPE’s perception about other mining countries with whom we Thousand cases the Peruvian mining industry in 2019? compete. There is a lot of interest in 70 2019 was a challenging year, notwith- Peru due to its geological potential and 60 standing having achieved over US$6 bi- economic stability, but we need to iron llion in mining investment. About 40% out the regulatory permitting challenges 50 of this investment was sustained solely that remain as soon as possible. 40 by three major projects that started construction back in 2018 – Quellaveco Why do you believe there have been 30 (US$5.3 billion), Mina Justa (US$1.6 bi- social tensions with some projects, 20 llion), and the Toromocho expansion and what could be done to ease these (US$1.3 billion) – highlighting the impor- tensions? 10 tance of developing new projects. Un- Data shows that approximately 30% 0 fortunately, no new large-scale mining of social conflicts arise from unmet ex- Feb 29 Mar 31 Apr 30 May 31 Jun 30 Jul 31 Aug 31 Sep 30 Oct31 project began construction in 2019, and pectations in connection to the lack of exploration investment decreased once public services and infrastructure in the again. In 2019, there were some US$356 remote areas where mining takes place. PERU ECONOMIC GROWTH BY MONTH Manuel million invested into exploration, around Another major cause of conflicts comes Source: INEI - Instituto Nacional de Estadística e Informática 14% less than in 2018. To maintain a from negative perceptions about the mi- % sustainable organic growth of Peru’s mi- ning industry and the absence of correct 10 Fumagalli ning industry, we must grow exploration information about our activities. To help to find new mining deposits, develop ease the social tensions from public ser- 0 the existing country project portfolio to vices demands, the government has the bring into production the future mines, responsibility to provide the same and -10 and improve the competitiveness of build the required infrastructure. The Peru to attract more investment. mining sector contributes large sums of -20 In 2019, we had approximately 3% less money through royalties and taxes, and in the overall amount of exports from the government must ensure this capital President -30 the mining sector compared to 2018. is directed towards this objective for the NATIONAL SOCIETY OF MINING, Although copper production increased benefit of local communities. Closing PETROLEUM AND ENERGY -40 marginally, the average price of cop- of social gaps will surely diminish so- Oct 2019 Jan 2020 Apr 2020 Jul 2020 (SNMPE) per was approximately 8% lower than in cial conflicts. Social tension can also be 2018. This impacted the value of copper eased through proper communication corruption scandal. On July 15th, Vilca of Culture for entertainment events and 90-95% of pre-Covid level capacity. exports, which represent about 50% of about formal modern mining activities to was replaced by Rafael Belaunde Llosa, motivational speeches between 2018 “Since August the market has been very Peru’s mining and metals exports. In the communities, by both the government who lasted a mere 22 days before being and 2020. When it emerged that Viz- active; mining companies are making case of gold, which is about 30% of total and the industry. replaced by Luis Miguel Incháustegui carra’s enemies in congress had been new requests, such as equipment addi- exports, production decreased by 8%, on August 6th. actively plotting against the President tions to their fleets, with an emphasis on however this was fully offset by higher What is SNMPE’s vision for the Pe- However, the appointment of Luis and trying to get the military involved, expanding brownfield operations,” said prices, with an average 10% higher price ruvian mining industry in the next 12 Miguel Incháustegui, a former Gold public opinion sharply turned against Gonzalo Díaz Pró, general manager of than in 2018. In the zinc market we saw months? Fields executive known for his experi- them. Caterpillar distributor, Ferreyros. “The » lower production levels and lower prices. By 2021, we would like to see the down- ence in social engagement and commu- However, this turmoil reemerged and message we are getting is that despite ward trend in exploration investment nity relations, was also short lived, as the reached an unexpected climax on No- a 20% output reduction in 2020, mining How can the issue of lengthy permit- reversed and hopefully new discoveries The SNMPE is actively working Vizcarra presidency came to an abrupt vember 9, 2020, as Vizcarra was contro- companies expect an equal increase ting times be improved? announced. We expect the government end in November. Sensibly, Incháuste- versially ousted from the presidency by next year,” he continued. with Government to streamline Permitting times and regulations have in- to implement mining permitting regula- gui’s vice minister, Jaime Gálvez, a pre- a Congress, against public opinion. The Another catalyst for this new-found the permitting processes, creased in the last decade and, as such, tions simplifications, in such a way that vious general director of Mining Promo- public outcry at the perceived ‘coup optimism has been high metals pric- the country has lost competitiveness. the country becomes more competitive cognizant of the importance of tion and Sustainability at MINEM, was d’etat’ and ensuing police violence led es, headlined by copper reaching the The SNMPE is actively working with Gov- from an investment point of view. We chosen as the country’s fifth minister of to Manuel Merino resigning after less US$3/lb benchmark in August. The attracting investment to the ernment to streamline the permitting hope to see the development of new energy and mines in 2020, allowing for than a week as Interim President. Peru bullish outlook for metals and minerals, country, while at the same time processes, cognizant of the importance mining projects from the existing coun- much-needed leadership continuity. must now hope that the well-regarded bolstered by pent up demand and infra- maintaining the high standards of attracting investment to the country, try portfolio to support investment lev- While changes at the helm of MINEM Francisco Sagasti, of the centrist Mora- structure-based government stimulus while at the same time maintaining the els and production moving forward. We the mining industry has. continued throughout the year, the do Party, will be able to restore a sem- packages, offers hope for 2021. How- high standards the mining industry has. hope for a recovery of zinc and copper political turmoil surrounding the Peru’s blance of calm as leader of the nation ever, the highest level of stewardship Due to the importance of fostering ex- production levels, supporting the coun- head office started to intensify in Sep- until the April 2021 general election. from both the government and the pri- ploration, it is currently under discussion try’s exports, along with gold. Lastly, we tember, as President Vizcarra was ac- Despite the political headwinds, cau- vate sector is now required to negotiate to move the ILO 169 public consultation expect the government to close social cused of being involved in a coverup tious optimism has returned to Peru’s this challenging period while the threat « opportunity from the exploration stage gaps by using the royalties and taxes involving singer Richard Swing, who mining industry, as operations quickly of Covid-19 remains a present day rea- to the feasibility mining project devel- contributed by the mining industry, thus was awarded contracts by the Ministry began ramping back up in Q3 to around lity. ■ opment stage, as is the case in several helping to reduce social conflicts. ■

PERU MINING 2020 12 Industry Explorations Global Business Reports 13 PERU MINING 2020 Industry Explorations FACTSHEET

PERU AT A GLANCE GDP EVOLUTION IN US DOLLAR VALUE Source: IMF, data for 2019 Source: IMF

Billion US$ PI 230 Lima 220 199.00 E E (projected) Francisco Sagasti 210 (Interim President, November 2020) 200 GP 190 US$228.9 billion 180 GP GR 170 2.6% 160 INEMEN GP 150 22.1% 140 GR NIN ING GP 130 20.2% 120 URREN UN NE GP 110 -1.9% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

DEMOGRAPHIC DATA GDP GROWTH Source: IMF, data for 2019 Source: IMF

% 7 POPULATION 32.2 6 MILLION 5

4

3 UNEMPLOYMENT RATE 2

6.7% 1 2020 0 2011 2012 2013 2014 2015 2016 2017 2018 2019

-13.9% GDP PER CAPITA (projected) GDP PER CAPITA IN US DOLLAR VALUE Source: IMF

US$ US, 8,500 8,000 7,500 747 7,000 GDP PER CAPITA (PPP) 6,500 5738 6,000 US1,19 5,500 5,000 4,500 4,000 INFLATION RATE 3,500 3,000 2,500 2011 2012 2013 2014 2015 2016 2017 2018 2019 Image courtesy of MMG Las Bambas

Global Business Reports 15 PERU MINING 2020 EDITORIAL Global Business Reports Industry Explorations EDITORIAL

On a micro level, for the regions that This subject of community engagement Stimulating host the projects the importance of was touched upon by Ulises Solís, gen- project development can be fundamen- eral manager of Macusani Yellowcake, Peru’s tal, a fact illustrated by the National In- the Peruvian subsidiary of Plateau Ener- stitute of Statistics (INE) declaring Puno gy Metals, who spoke of the issues pre- Project as the poorest district in Peru. “Mining sented by the prior consultation pro- Canon (amounting to 50% of income cess from an exploration standpoint: Pipeline tax, transferred to the regions and ar- “The social permission of the communi- eas of influence of projects) has been ties can sometimes expire because one decreasing in recent years, mainly due of the commitments is to give them to the lower contributions from Minsur’s work, which we cannot guarantee until San Rafael mine related to lower metal we have the permit.” prices as well as production. The direct One of the causes of these delays, QUELLAVECO AND and indirect revenues to local commu- according to Jorge Chávez, general nities from a project the size of Corani manager of mining consultancy Env- MINA JUSTA REMAIN will have a transformational impact in Phys, is that the number of regulations ON COURSE, BUT the region,” stated Elsiario Antúnez de and agencies involved have increased Mayolo, Bear Creek’s COO and general over time. “A common problem is the PERMITTING MUST manager. different evaluation criteria and inter- BE EXPEDITED TO Anthony Hawkshaw, Bear Creek’s presi- pretations of the authorities regarding dent and CEO, elaborated on progress legislation and technical requirements INCREASE GREENFIELD at Corani: “We managed to increase for mining projects. The criteria can be DEVELOPMENT production at the plant by 20% on a different, not only between agencies, daily basis, reduce operating costs, and but also between the professionals in increase the net return from around the same agency,” he explained, sug- 15% to almost 23%. Furthermore, we gesting that the evaluation criteria for Project development was impacted sig- reduced the payback period on initial permitting should be standardized and nificantly during the lockdown, as large capital from 3.6 years to 2.4 years.” that the regulatory framework should construction workforces were forced Bear Creek announced it had engaged be extensively simplified to achieve a to down their tools for months. How- Image courtesy of Anglo American BNP Paribas and Société Générale for more predictable permitting process. ever, since the sector has reopened, a US$400 million senior secured credit For Xennia Forno, partner at Peruvian progress has been made at several key pending, and Anglo American's US$5.3 next two-to-three years, but beyond facility in March 2020. law firm Estudio Rubio Abogados, sim- projects. billion Quellaveco project has suffered this, there are worries that thorny social The successful development of mi- plifying the requirements should not be In an online Jueves Minero event in delays. issues and cumbersome bureaucracy ning projects in Peru often depends on understood as a lack of concern for en- September, organized by the Peruvian Tom McCulley, CEO of Anglo American are limiting large-scale development. early-stage engagement with local co- vironmental and safety regulations. On Institute of Mining Engineers (IIMP), Quellaveco, commented: “Unfortunate- “For a country to receive investment, mmunities. In 2012, Common Ground a positive note, Forno has noticed ac- minister of Energy and Mines, Jaime ly for us, the pandemic happened when a number of conditions need to be Consultants did a review of the Corani knowledgement by the authorities that Gálvez, announced that construction we were at peak man-power and hitting met,” said Ricardo Labó, executive di- region and made recommendations to the processes must be streamlined: at Marcobre's US$1.6 billion Mina Justa top productivity levels, so it has had a rector of the Australia Peru Chamber Bear Creek as to the type of social pro- “The most important thing now is that copper project advanced during the significant impact on Quellaveco.” of Commerce (APCCI), explaining that grams the company should implement. the government is aware that the delay pandemic and is nearing completion. McCulley highlighted that prior to Co- in addition to geological potential and These recommendations were expand- in obtaining and granting permits is a Furthermore, he revealed that all the vid, the management team at Quellave- technical proficiency, you need to have ed upon by Andrés Franco, VP corpo- barrier to mining investment, especially permits for Newmont's US$2.1 billion co had been looking for opportunities the right political and social conditions. rate development, who elaborated for exploration. It is clear that there is Yanacocha Sulfuros [Sulfides] project to speed up development, such as “Projects like Quellaveco and Mina Jus- how Bear Creek is working towards the an urgent need to push exploration for have now been granted and, pending commissioning timeframe and ramp up, ta have managed to solve these issues, diffusion of information by educating new discoveries.” board approval, the project could start which helped offset some of the impact now we need to see which projects the local population on the project’s Indeed, this urgency has been com- in 2021. Gálvez also provided an up- of the pandemic. Indeed, despite the come next,” he added, noting that 2019 environmental impact: “Selected com- pounded by the economic devastation date on the US$431 million San Gabriel delays, he confirmed the 2022 target re- and 2020 have been disappointing from munity representatives were enrolled caused by Covid-19. “I am hopeful that gold project, currently in pre-consulta- mains intact: “In recent months we have a greenfield development standpoint. in an intensive program that covers the the coronavirus crisis and its dramatic tion stage, which is due to end this year, been in a process of remobilization, and With a lack of major greenfield projects Environmental and Social Impact As- impact on the economy will prompt and Southern Copper's US$2.8 billion expect to get back to top performance on the horizon after Quellaveco, pro- sessment, or ‘ESIA’,” he explained, with the right reaction by the government Los Chancas copper-molybdenum proj- levels by late 2020 or early 2021. Today, jects currently in the pipeline, such as the training covering such topics as use so that the exaggerated approach to- ect, which is progressing favorably and we do not know the full extent of Covid, Bear Creek Mining’s Corani silver-lead- of chemicals and the milling processes. wards prior consultation is changed,” could present its environmental impact but we still expect to finish in 2022 and zinc deposit in Puno, have taken on Franco noted that such an initiative reflected Oscar Díaz, CEO of Viceversa study (EIA) in 2021. we continue to look for ways to mitigate elevated importance. Furthermore, in stimulates community engagement, Consulting, adding: “In this recessive On the other hand, the approval of an all the Covid impacts as best we can.” light of the need to revive the economy provides a high level of transparency, scenario, we need the government to EIA modification for Chinalco's US$1.35 Peru’s healthy near-term project pipe- in a post-lockdown landscape, project and mitigates any risks that stem from take bold, disruptive actions to facili- billion Tomorocho expansion remains line should boost copper output in the development should become a priority. a lack of knowledge. tate investment.” ■

PERU MINING 2020 16 Industry Explorations Global Business Reports 17 PERU MINING 2020 INTERVIEW Global Business Reports

Tom McCulley

CEO ANGLO AMERICAN QUELLAVECO

What have been the main milestones achieved at at the forefront of technology and sustainability. We will be Quellaveco in the last 12 months? looking at future technologies to bolt on as we go, to ensure Before the Covid-19 outbreak, we were making great prog- that we are optimizing the sustainable use of resources and ress. We had started impounding water in the high moun- remaining cost-effective. tain area, putting concrete on the primary crushing area, and I have heard from other companies that Covid has changed or progressing the steel and mechanical installation at the plant expedited their technological path. The advantage we have area. One of the biggest milestones was the earthworks, at Quellaveco is that we started out on that path, and have which was completed earlier in 2020. On the operational not had to change anything from a technology standpoint. In side, we had started initial pit works, as well as starting to run time, we think that Quellaveco will be a catalyst for change four of our 794 trucks. More importantly, we had started our in the mining industry, and FutureSmart is a big part of this. operating training program, with local women running the trucks. I interviewed these women in July, and it was moving The Global Tailings Standard was launched in August to see how proud they were to be operating some of the big- 2020. What role did Anglo American have in its develop- gest and most modern mining trucks in the world. Overall, ment? this is a ground breaking program for us and shows the com- I am still Group Head of Projects for Anglo American, and mitment we not only have to the local community, but more the tailings group reports to me. Since 2014, we believe An- importantly, our diversity measures being put into action. glo has been the global leader in tailings management. We are proud of our role in developing the new Global Tailings How has the pandemic impacted the development time- Standard, having spent a lot of time with the organizations in- line at Quellaveco? volved to provide experience and input that went a long way Unfortunately for us, the pandemic happened when we were to shape the Standard. Quellaveco will meet international at peak man-power and hitting top productivity levels, so it standards from day one, and has had the benefit of having has had a significant impact on Quellaveco. However, prior Anglo’s global tailings head, Caius Priscu, as part of our team to Covid, we were looking for opportunities to exploit, which to ensure what we design, build and operate is world class. will now help offset some of the impact of the pandemic. In recent months we have been in a process of remobilization, In what ways has Anglo American helped local communi- and expect to get back to top performance levels by late ties during this year of particular hardship? 2020 or early 2021. Today, we don’t know the full extent of Our foundation has always been the dialogue table, and the COVID, but we still expect to finish in 2022 and we continue people who put the project together back in 2011/12 were to look for ways to mitigate all the COVID impacts, as best groundbreaking from a community relations and sustainabil- we can. ity standpoint. We follow that road map today by making sure we meet commitments. In 2020, health and wellbeing of the Can you explain what the implementation of FutureSmart workforce and local community has been the main priority, Mining will mean to the operation? providing test kits, oxygen and hospital beds from an early FutureSmart is a blend of technology and sustainability. If stage. We have also provided food and water for the needy, you go back to the vision and design of Quellaveco, it has re- not only from a company standpoint, but a personal stand- ally been focused on the long term sustainability of the mine, point, with our leadership team and some of our vendors giv- through effective use of things like water, energy and the en- ing back to the community. We also tried to look for areas vironment. Quellaveco has been focused on technology such where there was real need, and came up with a financing plan as automation, with digital and analytical tools all coming to- to help support local agriculture, which must develop in har- gether with our operating model at Anglo American which is mony with the mining industry. ■

PERU MINING 2020 18 Industry Explorations INTERVIEW Global Business Reports Industry Explorations EDITORIAL

Anthony What were the key findings of the NI How have Bear Creek’s relationships 43-101 Report published for the Cora- with the Chacaconiza and Quelcaya co- Managing Hawkshaw, ni project in December 2019? mmunities evolved? EC: The 43-101 is an update to the tech- AF: We are completely transparent with the Social nical report issued in 2017. Primarily we the local communities; for example, the Elsiario Antúnez looked at addressing risks on construc- local population has been educated Aspect tion design, trying to make a construct- about the environmental impact of the De Mayolo, ible plan and improve the economics of project. Selected community representa- the project. During the process, we did tives were enrolled in an intensive pro- Eric Caba & materials testing, additional geotechni- gram that covers the Environmental and cal studies, and contracted Ausenco to Social Impact Assessment, or “EISA” in SOCIAL TENSIONS Andrés Franco review the design of the process plant. detail, for example outlining the use of The net result saw the capex come out chemicals and explaining milling pro- REPRESENT ONE OF THE AH: President & CEO basically the same as in 2017, but with cesses. These people now have exten- BIGGEST BOTTLENECKS EAM: COO & GM significant changes within the capex re- sive knowledge about the ESIA and are EC: VP Project Development garding the distribution of capital. qualified to, and have been engaged to, IN PERUVIAN MINING AF: VP Corporate Development AH: We managed to increase produc- explain environmental matters related to BEAR CREEK MINING tion at the plant by 20% on a daily basis, the Corani project to community mem- reduce operating costs, and increased bers and visitors. This stimulates com- the net return from around 15% to al- munity engagement and provides a high most 23%. Furthermore, we reduced the level or transparency and, at the same On January 29th, President Martín Viz- carra announced that Southern Peru’s payback period on initial capital from 3.6 time, mitigates any risks stemming from Image courtesy of MMG Las Bambas years to 2.4 years. The capex is about a lack of knowledge about the impacts Tía María mining project in Arequipa US$580 million, but the people that pro- of the project. will not be carried out during his gov- clear information. “The mining sector is and mining lead at EY Peru, who believes vide the financing will expect us to pro- ernment. "In this government no, there complex and not always easy to com- that opposition to the mining sector is vide the capacity for potential delays and Bear Creek announced a CAD$16.6 is no way," he affirmed, declaring that prehend and comprehensive to be ex- not solely driven by concern for the en- start-up cost overruns, which will push million bought deal financing in Feb- granting a construction permit does not plained, and the challenge is to show the vironment, but also for political reasons. the number above US$600. ruary 2020. Where will this money be necessarily imply having a social license. benefits the industry can provide to im- “The public should also be aware that AH invested? Although Vizcarra mentioned that other prove the quality of life to the inhabitants the mining industry pays more taxes than In March 2020, Bear Creek Mining an- EAM: In 2017 we started to build a sub- mining projects were being successfully with something tangible rather than just any other sector in Peru,” said García. nounced it had engaged BNP Paribas station near the town of Macusani to developed, the risk that a project as high- rhetoric,” he said, continuing: “I believe “Since 2011, mining companies pay an and Société Générale for a US$400 provide energy for the project but also profile as Tía María becomes the poster that developing projects in a low-profile overall tax burden that goes from 42% to million senior secured credit facility. to provide social benefits. In 2020, we child for resource development in Peru, manner and/or just as a good neighbor 52%, depending on the profitability level Can you expand on this transaction? will continue with the power line, which at least in the eyes of the general pub- should be things of the past – the sec- of the mine,” he added. AH: Both banks have substantial mining will also help the community. We want to lic, is not something that should be taken tor has to have a more visible face and The involvement of new stakeholders experience, financing projects such as integrate the project development and lightly. involve more in alliances with people and in the effort to build social relationships Mina Justa in Peru and, in 2018, they social support to solidify the good rela- “If you look at the outcome of the con- local activities from the surrounding ar- and tackle anti-mining stigma is being provided approximately US$13 billion of tionships we have with the communities gressional election that took place on eas.” expanded beyond the traditional three- EAM financing for mining projects around the and local authorities. We also intend to January 26th, you will notice that politi- For Jorge Chávez of EnvPhys, it is impor- pronged axis of the mining company, world. Based on their desktop work, each invest in the project access road, which cians with anti-mining rhetoric won in tant that the industry and government government and community leaders, of them offered indicative terms, and has been a matter of contention for other regions where mining is prevalent,” ob- work together to increase the acceptabil- according to Gonzalo Covarrubias, gen- each proposed they would like to work mining projects in Peru. served Claudia Cooper, president of the ity of mining in Peru. “Normally a per- eral manager of WSP Peru. “Consulting with another bank for syndication. Lima Stock Exchange (BVL), ex-minister centage of mining in the GDP or amount firms can help from a technical approach, We negotiated an engagement letter What would the successful develop- of the Economy, and president of PERU- of taxes paid by the mining industry is and can help engage NGOs, which is which sets out the due diligence process. ment of the Corani project mean for MIN, the country’s main mining conven- used to explain the positive impacts of something WSP has been doing in Latin Discussions with other sources of finance the Puno region? tion and exhibition, for 2021. “Despite mining; nevertheless, the normal citizen America,” he elaborated, stressing the with respect to an inter-creditor arrange- EAM: The project is vitally important for the mining sector giving a lot of money perceives of these concepts as abstract need for mining companies to consider EC ment, legal documentation, translation the Corani district, which the National In- to the regions it operates in, there is still and not related to their day to day ac- how they can bring value to a community of documentation, and perfection of se- stitute of Statistics (INE) declared is the a lot of anger,” she added, advising com- tivities,” he said, suggesting that the longer than the life of the project. “Mi- curity in Peru, should take an additional poorest district in Puno. Mining Canon panies to be proactive in their engage- positive impacts of mining should be re- ning companies cannot afford to only be three or four months. Sometime in Q3 has been decreasing in recent years, ment with communities instead of leav- inforced and explained to the people in experts at their core business, but must 2020, we hope to have put together an mainly due to the lower contributions ing the relationship building to the state. innovative ways: “More effective would now consider the long-term social aspect additional US$250 million of financing from Minsur’s San Rafael mine related to Why does this anger exist? Augusto be the contribution of mining in people’s from the very beginning of a project.” that may include offtake arrangements lower metal prices as well as production. Cauti, former vice minister of Mines (until pension funds, salaries, or how much For Steven Botts, president of Santa Bar- with smelters and/or traders, possibly a The direct and indirect revenues to local August 6th), spoke of the lack of trust that taxes would have to be increased if the bara Consultants, the social and environ- base metals stream, subordinated debt, communities from a project the size of has grown in recent years from all par- mining industry stops.” mental issues surrounding a project can and a portion of equity to complement Corani will have a transformational im- ties in the mining sector, and the need The public perception of mining was also actually benefit mining companies, as AF the debt facility. pact in the region. ■ to present appropriate, transparent and touched upon by Marcial García, partner they offer the chance to show tangible

PERU MINING 2020 20 Industry Explorations Global Business Reports 21 PERU MINING 2020 EDITORIAL Global Business Reports Industry Explorations INTERVIEW

actions rather than the usual corporate Juan Luis Kruger of Minsur, this was an vinced Glencore to pay S/1,000 per elec- How important is the mining industry to the Peruvian economy? rhetoric. “Although many mining compa- opportunity to reframe the discussion tor to the Espinar province and helped Claudia The mining sector contributes to between 10 and 15% of GDP, but its great importance nies look at this as a challenge, the con- around mining with local governments settle a local dispute in Caylloma next is the macroeconomic stability it gives to the Peruvian economy. All of our external servation of biodiversity can represent a and host communities, as people started to the Fortuna Silver mine. Furthermore, and fiscal accounts are heavily dependent on this. 60% of Peru’s exports are from the big opportunity, as it gives the company to appreciate the delivery capacity of in an interview with La República in Sep- Cooper mining industry, and it accounts for more than 50% of overall foreign investment. It is a chance to put their values into prac- mining companies in remote areas.” tember, Incháustegui mentioned that the also important for income tax collection. Mining contributes to Peru having a stable tice.” In the case of Minsur, they had been government has spoken to Las Bambas exchange rate, stable prices and very low interest rates. Put simply, Peru is a mining Considering the economic burden struggling for many months to get per- about the need for a concentrate pipe- economy, and a very large part of our growth depends on the sector. placed on the Peruvian economy mits to build a health clinic, but when the line or train to transport product. “I don't President We opened our economy to international markets in the 90’s, so that foreign invest- by the pandemic, could the role pandemic started, the authorities recog- think anyone would like more than 300 LIMA STOCK EXCHANGE (BVL) ment and local investment have exactly the same guarantees and procedures. mining companies have played in the nized the urgency and removed the red trucks to pass by their community per emergency response help rejuvenate the tape. day, even if the road has been paved,” What are the strengths and weaknesses of Peruvian mining from an investment sector’s image? In July, the International In parallel to the mining sector’s emer- he said. standpoint? Council on Mining & Metals (ICMM) held gency response measures, which includ- For Peru to successfully iron out the so- The geological endowment is the first thing, but Peru’s economic model is also very a meeting with mining industry leaders ed the delivery of oxygen, PPE and es- cial tensions that surround its mining attractive for foreign investment. We are better than our neighbor countries in this re- titled ‘Covid-19: Communication and sential supplies to local communities, the industry, a sustained collaborative effort spect. The issue now is the relationship of the mine with its near environment. Despite collaboration to tackle a common enemy’. new minister of Energy and Mines, Luis between the private and public sector the fact the mining sector is generating a lot of resources for the regions it operates Tom Butler, ICMM CEO, discussed Miguel Incháustegui, has been proactive should be one of the top priorities for the in, there is still a lot of anger. A better coordination with the Government and an im- how the sector’s robust response was in debottlenecking social conflicts. In his Sagasti administration and whoever wins proving relationship must be forged with the neighboring communities. If you look at being noticed: “As pointed out by first month as minister, Incháustegui con- the election in April 2021. ■ the outcome of the congressional election that took place on January 26th, you will notice that in mining regions the politicians with anti-mining rhetoric won, so this is something the industry has to work on. INTERVIEW We have many successful examples, such as Quellaveco, Antamina, Mina Justa and Cerro Lindo, where the mining sector works with the local communities. The problem is when this is left to the State, which is not efficient enough to deliver quick progress. Tom The Global Industry Standard on Tail- Private companies must be proactive in this regard. ■ ings was launched in August 2020. What were the contributing factors Butler that led to its creation? What do you think makes Peru attractive as a mining jurisdiction, and how could it Everyone will have heard of the Bru- Jorge León be improved? CEO madinho tragedy of January 2019. That Peru is an attractive country for investment because of these main points: First, internation- INTERNATIONAL COUNCIL ON was the second big tailings catastro- ally recognized macroeconomic soundness; second, a favorable climate for investment; fi- MINING AND METALS (ICMM) phe in Brazil, after the Samarco disas- Benavides nally, a policy of integration and trade openness sustained over time. Another element that ter in November 2015. After Samarco undoubtedly increased mining investment in Peru has been the revision of environmental we commissioned a technical review, laws in such a way as to reduce socio-environmental conflicts to a minimum. The mining involving ICMM and some engineering sector is of the utmost importance to the Peruvian economy, particularly with regard to In July, ICMM held a meeting with mi- health services, infrastructure support companies. However, after Brumadinho exports and investment, that generate both direct and indirect employment increases. ning industry leaders titled COVID-19: and even basic food and water supplies. we decided it was necessary to conduct President Political stability is a fact of vital importance for the increase of investments, which in the Communication and collaboration to At the start of the pandemic, there was something that was much more holistic, CHAMBER OF COMMERCE long run will generate more jobs, greater benefits and development of a country. The tackle a common enemy. What were an initial discussion as to whether the mi- to make sure we were doing everything CANADA PERU (CCCP) confidence generated by the Peruvian government in the private sector will be essential to the key takeaways from the discus- ning industry is essential, but this ques- we could to minimize the risk of that increase investment in the mining sector. President Francisco Sagasti in this transition pe- sion? tion is more than just the importance of happening again. We proposed a multi- riod of his government must establish a policy of support for the mining sector: he knows We talked about the response of the in- the metals and minerals that are mined. stakeholder review and, in parallel, the he can take advantage of the increase in mineral prices. dustry, which I think was very robust and If you shut an operation down there can Church of England (C of E) and Swedish effective. The industry has health and be serious implications for host commu- Council on Ethics (which represents the What work does the CCCP do to promote business and investment in Peru? safety as a core value, and it is used to nities. Swedish sovereign wealth fund) were The CCCP has solid business platforms, which help to boost supply and demand among responding to all kinds of challenges. For Furthermore, as pointed out by Juan thinking along the same lines on behalf the mining companies, large suppliers of the mining sector and global investors and entre- example, there are many companies that Luis Kruger of Minsur, this was an oppor- of investors, so we teamed up with them, preneurs. This platform is hosted on the Chamber's website and in this way mining com- have had to deal with malaria and Ebola, tunity to reframe the discussion around representing the Principles for Respon- panies are able to consolidate their business requirements with the entire circle of interest. so they are used to dealing with epidem- mining with local governments and host sible Investment (PRI, a UN-supported Likewise, our participation in international and national trade fairs help to manage busi- ics. We brought all of the companies to- communities, as people started to ap- international network of investors man- ness and investments in our country, such is the case of PDAC, Perumin and Expomina. gether, and those that were less experi- preciate the delivery capacity of mining aging more than US$100 trillion in as- It is essential for us to be able to attract top-level representatives of the Canadian Govern- enced in dealing with infectious diseases companies in remote areas. In the case sets). Together with the United Nations ment to Expomina Perú 2021, who will act as key players and who can forge truly meaning- were learning from those that have dealt of Minsur, they had been struggling for Environment Program (UNEP), who ful links with their Peruvian counterparts. The only way to recover the economic growth of with such issues on a more regular basis. many months to get permits to build a represents countries and implicitly their Peru is to work with other countries towards the same objective. We are also looking to The other topic that came up was the im- health clinic, but when the pandemic citizens, the multi-stakeholder approach attract senior representatives from leading Canadian mining companies, both producers pact of closing operations down. In many started the authorities recognized the ur- was formed and terms of the review were and explorers. Likewise, we want to count on the participation of the most prominent mi- jurisdictions, mining companies provide gency and removed the red tape. agreed on. ■ ning suppliers. ■

PERU MINING 2020 22 Industry Explorations Global Business Reports 23 PERU MINING 2020 GBR • Industry Explorations • PERU MINING 2020

MINING PRODUCTION

"Since August the market has been very active. Mining companies are making new requests such as equipment additions to their fleets, with an emphasis on expanding brownfield operations. The pandemic caused clients to reduce sustaining capex as well as investment capex, but this will rebound in 2021. The message we are getting is that despite a 20% output reduction in 2020, mining companies expect an equal increase next year."

- Gonzalo Díaz Pró, General Manager, Ferreyros S.A.

Image courtesy of Southern Copper Corporation EDITORIAL Global Business Reports Industry Explorations EDITORIAL

Copper with 459,219 mt/y, and Southern Peru in the global financial crisis of 2008-2009, pects to be mining ore from the deposit num plant to achieve 100% processing, copper, zinc, gold and silver mine lo- third place with 414,394 mt/y. Las Bam- but in a remarkable turnaround, a re- in H1 2021. and the production of the third ball mill, cated in Junin. “Ariana is currently in a bas, operated by MMG, was the fourth covery of over 50% saw spot prices In the medium term, Peru’s ambition to which should be completed by the end state of limbo and what is happening is biggest copper producer with 382,500 break the US$3.00/lb barrier in August, make substantial inroads into the pro- of 2020. Through these investments not only a threat for the project, but for mt/y, almost equaling its 2018 mark de- a level that increased to over US$3.20/ duction gap with Chile seem unlikely to and the easing of social conflicts, the all new mining operations in Peru,” stat- spite a series of blockades which pre- lb in November on the back of posi- be fulfilled. Although Chilean produc- company’s aim is to achieve sustainabil- ed Adolfo Vera, Southern Peaks’ presi- vented the transportation of concen- tive Covid vaccine news. High imports tion fell by 0.8% in 2019 on the back ity in copper production. “Las Bambas dent and CEO, who clarified that, while THE RESTART OF trate from the site to the Matarani port. from China were the main catalyst for of declining ore grades and financial hopes to achieve production of approx- there is no local opposition to Ariana, Having experienced sharp growth be- this rise, and government-backed infra- issues at state giant Codelco, catching imately 2 million mt of copper during an NGO contesting the project caused OPERATIONS AND RISING tween 2014 and 2017, moving from an structure projects across the globe en- up to Chile’s total of 5.78 million mt/y the five year period of 2021 to 2025 – an Southern Peaks to reduce the rate of COPPER PRICE OFFERS annual average of less than 1.5 million hance the bullish sentiment. would require numerous district scale average of 400,000 mt/y – an amount construction whilst awaiting a decision mt/y in the years previous, this pe- A robust near-term pipeline of expan- projects to move into production. Be- significantly above the levels forecast from the Constitutional Court. RENEWED OPTIMISM riod of stability preceding the new de- sion projects, anchored by two high- fore the coronavirus outbreak, MINEM before production started,” he said. Underlining the role the mining indus- cade was expected to be followed by profile greenfield projects – Mina Justa had predicted an increase in Peru’s cop- When asked about the delayed devel- try plays in the country’s economic de- growth. However, the damage caused and Quellaveco – gives Peru a solid per output of 27% by 2022, but prog- opment of Tía María, Oscar González velopment, Vera suggested that this by the coronavirus will certainly see platform for growth. In 2021, Southern ress will be partly dependent on the Rocha, president and CEO of South- source of income should be protected production decrease in 2020; the min- Copper’s Toquepala expansion will see ironing out of social issues that have ern Copper, suggested that doubt in instead of fought against: “Once the istry of Energy and Mines (MINEM) an- its first full and uninterrupted year of interrupted production at Las Bambas the project had been spread by some nonsensical claim is rebuffed, the Ari- Before the Covid-19 pandemic ground nounced in August that production of production. Minsur’s Mina Justa opera- and delayed projects such as Southern members of the Peruvian government, ana project is approximately 18 months the majority of Peruvian mines to a halt copper plunged 20.4% in the first half tion was expected to open by the end Peru’s Tía María. and alleged that anti-mining activists away from being completed,” he said. save for essential measures such as flo- of 2020 compared to the same period of 2020, but will now ramp-up in 2021, On the subject of the reoccurring block- have been using violence against the Vera went on to detail the progress tation, processing and environmental in 2019. While the extent of production due to lockdown delays, and is expect- ades, Edgardo Orderique, Las Bambas’ local population. “The Tía María proj- made by Southern Peaks in 2019, in- care and maintenance, Peru had experi- lost in H1 is alarming, more promising ed to produce 100,000 mt/y of copper, general manager of operations, com- ect is one of the best mining projects in cluding the geological reinterpreta- enced three years of stable copper pro- news came when minister of Energy and including 58,000 mt of copper cath- mented that open dialogue with the the world from an environmental stand- tion of its Condestable flagship asset, duction. In 2019, Peru’s copper produc- Mines, Jaime Gálvez, announced that odes. Anglo American’s Quellaveco local communities in Apurímac was on- point; it has no tailings and there are no increasing the life of mine significantly, tion stayed within a percentage point copper production fell by only 2.2% in will contribute a further 300,000 mt/y going to find a mutually beneficial solu- smelting fumes, so we hope authori- and growing resources by a multiple of the previous year’s figure, reaching July compared with the same period a of copper starting in 2022. In February tion. Furthermore, he noted that since ties understand there is no possibility of 2.4, a mark Vera expects to improve an annual total of 2.46 million tonnes year earlier. 2020, Hudbay Minerals secured a sur- Las Bambas started operations, Apuri- of contamination,” reassured González on again in 2020. “As soon as we ob- (mt/y), a 0.8% year-on-year increase. Furthermore, the market revival of the face rights agreement with the commu- mac has been transformed from one of Rocha, noting that Southern expects tain the permit, we will start to further Cerro Verde, the mine operated by red metal in H2 2020, despite a de- nity of Chilloroya for the Pampacancha the poorest regions with the lowest de- to develop Tía María project with an expand the capacity at Condestable Freeport McMoRan in Arequipa, re- pressed world economy, is injecting satellite deposit located near the com- velopment and growth rates, to having investment of US$1.4 billion to produce in light of the new size of the resource mains the largest producer of copper much needed liquidity into producers pany’s flagship Constancia copper-gold the leading regional growth rate. 120,000 mt of copper cathodes annu- and reserve,” he explained, adding that in Peru, with 473,980 mt/y (2019 data), looking to make up for time lost dur- mine, the lowest cost open-pit sulphide Orderique also elaborated on MMG’s ally. the company hopes to have completed followed closely by Antamina (a BHP- ing lockdown. In March, copper traded copper mine in South America accord- investment plans at Las Bambas, which Another project to have been delayed a feasibility study on the expansion of Glencore-Teck-Mitsubishi joint venture) below US$2.00/lb, its lowest level since ing to Hudbay, which announced it ex- include the upgrade of the molybde- is Southern Peaks Mining’s Ariana, a Condestable by 2021. ■

Resourceful Thinking Geology Mine Environmental Mine Water Management Mine Engineering Mine Infrastructure Mineral Processing Mine Closure

wsp.com

PERU MINING 2020 26 Industry Explorations Global Business Reports 27 PERU MINING 2020 INTERVIEW Global Business Reports Industry Explorations INTERVIEW

Edgardo Oscar Orderique González Rocha

General Manager – Operations President & CEO MMG LAS BAMBAS SOUTHERN COPPER CORPORATION

What were the highlights achieved by mately 5,500 mt/h. Furthermore, we between 2021 and 2025 – an average of To what extent has Covid-19 impact- Apurimac region, will add 130,000 mt/y and efficiency at Southern’s Peruvian MMG Las Bambas in 2019? have improved the weight, speed and 400,000 mt/y – an amount significantly ed Southern Copper’s operations? of copper contained in concentrates operations? Despite having social problems, we still tire lifespan of our trucks. above the levels estimated before pro- We have continued operating our mines with an investment of US$2.8 billion. The new concentrator at Toquepala managed to achieve strong production As for crushing, we have reduced the duction started. Our primary goal is to in Peru and Mexico, despite lockdowns We are about to finish the environmen- added 100,000 mt/y of copper con- levels in 2019. We closed the year with granulometric classification of the ma- have zero production incidents. Safety is in both countries, which has been tal impact assessment (EIA) to obtain tained in concentrates, which repre- 382,500 mt/y of copper concentrate. terial so that we have more processing the number one pillar of our company, achieved partly by imposing local quar- the construction license at this project, sents approximately an increase of 30% Thanks to several productivity efforts in when grinding. We have also started so we are working on programs such as antine measures at our projects that which also contains molybdenum and to our production capacity compared mining and processing, negative effects using another type of liner in the grind- Safe Tasks, We Take Care of One An- are far from large settlements. Cop- gold reserves. to previous production. We also have a were mitigated. We continue to make ing zone that allows us to process higher other, Stop and Think, the 3 Qs, and per production was down just 1.3% in Michiquillay in Cajamarca will increase desalination plant which processes sea- significant efforts to keep a strong dia- volumes of ore, as well as new reagents Behavior-based Safety to promote an Q2 at 253,097 mt, as lower output at our copper production by 255,000 water for our personnel residents of Ilo logue with the surrounding communities in the flotation area that allow a higher interdependent culture of safety across Buenavista in Mexico was partly offset mt/y, with an investment of US$2.5 bi- and for the metallurgical process. and work towards sustainable develop- recovery of difficult-to-process minerals the company. by an increase at Cuajone in Peru. Guid- llion. We have also increased reserves, Regarding new technology, we foresee ment. like clay, marble and talc. These reagents ance for 2020 is 997,100 mt, a reduction achieved higher production and mined an increased in artificial intelligence (AI) Las Bambas is the fourth-largest cop- make materials float and stop them from Do you have a final message for the of only 1,300 mt from original forecasts. higher grades at Cuajone in 2020. SCC in all of SCC’s processes. All production per producer in Peru. Although we are being encapsulated in the tailings. We Peruvian mining community? On the positive side, the company’s has the financial capacity to develop all areas are using or incorporating AI and slightly below our goal, we hold a strong have changed and implemented an air- MMG and Las Bambas will continue bet- molybdenum production increased by of these projects at the same time with digitalization in order to increase effi- national position. Our main investment forced system in the first cells of the ting on mining investment in Peru. Our 16.3% in Q2, with silver up by 13.5%. a total investment of US$8 billion, which ciency, safety and productivity. projects are related to the upgrade of rougher-scavenger flotation system to focus relies on our operations area: pro- Southern Copper Corporation (SCC) is will increase our copper production by the molybdenum plant to achieve a improve the copper recovery. cess improvement and reservoir identi- making every effort to keep production 575,000 mt/y. Can you provide examples of South- 100% processing of this ore. Another fication. We will continue working with at satisfactory levels while achieving a ern Copper’s social initiatives in Peru large project we are working on is the Can you explain Las Bambas' ap- the communities and contributing to competitive cash cost. This is reflected What issues have caused the delay and how the company has helped co- construction of the third ball mill that proach to tailings management? the development of their regions. The in our 2Q20 cash cost per pound of to the development of Tía María, and mmunities during this time of econo- began in mid-2019 and should be com- We now have a 95% water recovery and company gives away 3% of its sales as US$0.67 net of by-product credits. We what actions is Southern Copper tak- mic hardship? pleted by the end of 2020. This will help thus do not re-introduce much fresh wa- royalties, which benefits the 84 munici- are operating in total compliance with ing to resolve the situation? We continue to fight the Covid-19 pan- achieve sustainability in copper produc- ter to the process since we can re-pump palities of the Apurimac region, mainly local, regional and national emergency There has been doubt placed by some demic, prioritizing efforts to safeguard tion. On the other side, we have been the same water. Las Bambas uses a lot the Cotabambas province where Las measures, and we have implemented members of the Peruvian government, the health and wellbeing of our work- purchasing mining equipment including of geotechnical and hydrogeological Bambas is located. Poverty reduction, rigorous hygiene, sanitation and safety and some anti-mining activists have force, their families and nearby commu- a 75 cy (+100-short ton) electrical shovel, instrumentation that allows us to moni- improvement in nutrition and education protocols at all of our facilities. been using violence against the local nities in Moquegua, Tacna, Arequipa, 13 400-short ton haul trucks and related tor the process in real time and avoid are some of the proven positive impacts population. However, SSC has main- Apurimac and Cajamarca. In addition, in auxiliary equipment since 2019. As a any issues. Independent auditing firms this province has had. What are Southern Copper’s plans tained a strong relationship with major- order to collaborate with the Ministry of result, this year we will continue imple- inspect our operations twice a year and Before Las Bambas started its opera- for investment in Peru in the next ity of stakeholders and has explained Health, SCC is providing 30,000 liters of menting our mining plan and start build- keep us permanently informed in case of tions, Apurimac was one of the poorest five years? our project step by step, while at the oxygen every week to regional hospitals ing our next pit. any potential situation. We have placed regions and had the lowest develop- We expect to develop the Tía María same time developing social programs in the Arequipa and Moquegua regions piezometers that monitor any filtrations ment and growth rates. Currently, this project with an investment of US$1.4 to increase wealth in the area. The Tía for Covid-19 patients. Furthermore, we What operational improvements have around the dike, along with robotic ra- region leads the regional growth rate. billion to produce 120,000 mt/y of cop- María project is one of the best mining have been delivering sanitation kits been made to optimize production? dars and geotechnical monitors to de- Mining promotes progress in remote per cathodes. When Tía María starts its projects in the world from an environ- to the National Guard, police workers, Significant operational improvements tect any instability in or near the tailings places of the country and works as lever- operation, Southern is also evaluating a mental standpoint; it has no tailings health centers and local communities were made in 2019. We managed to have storage facility. age to promote employment, entrepre- new smelter with a capacity of 1 million and there are no smelting fumes, so we to prevent dissemination of the virus. a minimum of 35% of fine ore from the neurship and other economic activities. mt/y to process copper concentrates hope authorities understand there is no Besides this, we continue our efforts to primary process of the mining operation, What are the main goals and objec- The development and sustainability of and an expansion in our refinery to pro- possibility of contamination. support vulnerable people, providing which allowed us to have a better milling tives of MMG Las Bambas in the com- Las Bambas will mean that other large duce 280,000 mt/y of cathodes – this nutrition and sanitary kits. Due to social throughput. We have also reduced the ing years? mining projects located in Apurimac can project represents an investment of ap- How have operational improvements distancing measures, we have reinforced waiting time of the shovels when loading Las Bambas hopes to achieve production be implemented to benefit the region proximately US$1.3 billion. and the introduction of new techno- educational, health and economic initia- the trucks, enabling us to load approxi- of approximately 2 million mt of copper and the country. ■ Los Chancas, another deposit located in logy increased production capacity tives through online programs. ■

PERU MINING 2020 28 Industry Explorations Global Business Reports 29 PERU MINING 2020 INTERVIEW Global Business Reports

How was 2019 for Southern Peaks Mi- rance about what the mining industry is ning? doing and I believe that the government From an operational perspective, South- should step up to educate and inform ern Peaks Mining experienced some the country of the importance of mining. challenges in 2019, one of which was The mining sector should also be trans- the delay in obtaining a permit to ex- parent and communicate what is going pand capacity at Condestable. We have on in the industry. yet to obtain the permit, which we hope Once the nonsensical claim is rebuffed, will be achieved in Q1 2020. In 2019, the the Ariana project is approximately 18 company was focused on reinterpreting months away from being completed. We the entire geology of Condestable, and have finalized most of the surface infra- we have been able to increase the life structure and what remains is the heavy of mine significantly. In 2019, we were work of building up a processing plant able to multiple resources by 2.4 times and the mine development. and we are expecting to see an even larger multiplier in 2020. As soon as we Despite experiencing a volatile couple Adolfo obtain the permit, we will start to further of years, investors still seem quite expand the capacity at Condestable in bullish on copper. How do you view its light of the new size of the resource and fundamentals? Vera reserve. The fundamentals in terms of supply and demand have not changed and therefore Can you elaborate on the financing we are expecting a deficit in copper to strategy for the Condestable expan- arise quite soon. However, the sudden sion? ability of the market to find sizeable We have recently agreed a loan contract copper supplies in warehouses at short of approximately US$50 million with Sco- notice does raise an eyebrow. The im- tiabank Peru. This raise was specifically pacts that events in China can have on President & CEO for the expansion of Condestable and is the price is also a worry, as one country SOUTHERN PEAKS MINING currently the only debt the company has. having such influence on the price of a We will not need any further funding for commodity creates instability. The fun- the expansion of Condestable. We are damentals are being measured in terms hoping to achieve 20% increase in capac- of what we know copper is being used ity, which will translate into 20% increase for today, such as infrastructure develop- in production and hopefully profit. ment. The electric vehicle market is the factor that will significantly drive up the What is the timeline for the develop- demand for copper. ment of the Ariana project? Ariana is suffering in the same way as Tia What are Southern Peaks Mining’s Maria, not in the sense that there is lo- principle objectives for 2020? » cal opposition for the project, but there We aim to reinstate the Ariana project as was an NGO that set up a battle against soon as possible. The other key objec- the project. Southern Peaks Mining thus tive is to obtain the expansion permit for chose to significantly reduce the rate the Condestable project, and we hope to We hope to have completed at which we were building Ariana while have completed a feasibility study on this a feasibility study on the waiting for the decision from the consti- expansion by early 2021. Southern Peaks tutional court. This approach is unique in Mining will also start looking for addition- Condestable expansion by early that it is the first time it has been used al assets in Peru and Latin America, and 2021. Southern Peaks Mining will for a project that had obtained all the we have set some goals for the corporate also start looking for additional required permits, licenses and authori- development of the company which we assets in Peru and Latin America. zations. Ariana is currently in a state of hope to achieve moving forward. limbo, and what is happening is not only Southern Peaks Mining is celebrating its a threat for the Ariana project, but for all 10th anniversary in 2020. The company new mining operations in Peru. has matured and has clearer goals for its The country and all its inhabitants need way forward. We now know what drives to understand how important the mining value and we are concentrating on these « industry is for the economy of Peru. This drivers. Our focus is on delivering value source of income should be protected and we will continue chasing cash gen- instead of fought against. There is igno- eration from a business perspective. ■

PERU MINING 2020 30 Industry Explorations FACTSHEET Global Business Reports Industry Explorations EDITORIAL

COPPER PRODUCTION IN PERU AVERAGE COPPER PRICE GOLD PRODUCTION IN PERU Sources: MINEM / GBR Sources: MINEM / GBR Sources: LME / GBR Precious Million oz

Million mt 7 Variation 2.5 2.45 $/tm $/lb Metals 6 2018-2019 -9.94% 2.4 2016 4,863 2.21 5 Variation 4 2.2 2018-19 (%) 2017 3 4.13 +0.8% 6,162 2.80 2.0 THE BULL MARKET IS 2 1.8 2018 6,525 2.96 OFFSETTING DECLINING 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1.6 2019 6,005 2.72 PRODUCTION SILVER PRODUCTION IN PERU 1.4 Sources: MINEM / GBR Million oz 150 Variation 1.2 2020* 7,009 3.18 2018-2019 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 *Till 12th Nov From a price standpoint, 2020 has been 140 -7.24% a year to remember for gold and silver 130 producers, as the beginning of what 120 GLOBAL COPPER PRODUCTION (2019) many expect to be a secular bull mar- 110 124.1 Sources: USGS / MINEM / GBR ket gathers pace. Although economies 100 Million mt 1 have opened up in recent months, the Chile 5.60 decision by central banks to print vast 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2 sums of money to revive economies, Peru 2.46 3 currency devaluation, inflation and a announced that Gobitz would move to in significant cost savings. “Orcopampa China 1.60 deep global recession have all created Antamina. García revealed that due to is a different case, because we have 4 USA 1.30 the perfect storm for precious metals to the effect of Covid-19, Buenaventura’s re-sized the operation, and a big focus 5 thrive. main focus has been on preserving now is on the exploration front in order DRC 1.30 6 In Peru, gold production declined for cash, refinancing the company’s syndi- to increase the LOM of the operation. Australia 0.96 the fourth consecutive year in 2019, with cated loan, and obtaining a 30-month Finally, at Marcapunta we should reap 7 Zambia 0.79 an annual output of 4.13 million ounces period of grace. “Also, we postponed the benefits of the program by the end 8 (oz/y), a 9.94% decline from 2018. Like- our 2020 dividend payment until we of 2020 and beginning of 2021,” con- Mexico 0.77 wise, silver saw a 7.24% decrease from have more visibility about the current cluded García. 9 Russia 0.75 133.8 million oz/y to 124.1 million oz/y, situation, and now we are working on Meanwhile, Gold Fields continued its 10 its third consecutive year on a down- refinancing the US$115 million balloon growth in South America in 2019 with Kazakhstan 0.70 ward trend. payment of Huanza’s leasing that we the advancement of its Salares Norte Indonesia 0.34 Despite decreasing production, Peru expect to close in November,” he ex- project in Chile, as well as the comple- World total (rounded) 20.00 remains the sixth biggest gold pro- plained. tion of a feasibility study at its Cerro ducer in the world and the second big- García also acknowledged that the Corona mine in Cajamarca, where mine gest silver producer. Declining output is downward trend in gold production and life has been extended to 2030 – an GLOBAL COPPER RESERVES (2019) being offset by surging prices, as gold diversification into base metals is being extension of seven years. With a scop- Sources: USGS / MINEM / GBR reached an all-time high, breaking the reflected in the company’s portfolio, ing study set to be performed in 2020

Million mt US$2,000/oz barrier for the first time with production falling at Orcopampa aimed at further extending the LOM at 1 Chile 200 ever in August. Silver suffered more and La Zanja, and Yanacocha’s produc- Cerro Corona to 2034, Luis Rivera, Gold 2 than gold during the liquidity crunch tion currently stable at around 0.5 mil- Fields’ executive vice president of the Australia 87 and ensuing market sell-off in mid- lion oz/y, but expected to decrease in Americas region, gave an overview of 3 Peru 87 March, but recovered to reach over the coming years. “In the medium term, the milestones achieved by the com- 4 US$29/oz in August, its highest mark San Gabriel will be a key project for us pany and its growth ambitions in Peru: Russia 61 5 since 2013. Despite the prices of both as it will be a breaking point; while Ya- “Gold Fields’ South American opera- Mexico 53 metals dipping slightly in September, nacocha, Tantahuatay and La Zanja will tions have the company’s lowest run- 6 USA 51 the cash flow produced from sales in become gold-copper producers and ning costs in the world. The net profit 7 Q3 2020 should show some eye-catch- not just gold producers.” coming out of Peru is 21% of the com- Indonesia 28 ing numbers. Buenaventura’s debottlenecking pro- pany’s entire profits. Our Peru business 8 China 26 Buenaventura is Peru’s biggest precious cess across its four main operations contributes approximately 310,000 9 metals producer, with a wide array of its has continued in 2020; the simplifica- gold equivalent ounces per year (oz Kazakhstan 20 10 own operations and a stake in Yanaco- tion of the metallurgical process and eq/y), and our objective is to acquire DRC 19 cha (Peru’s largest gold mine operated optimization of mine preparation have another asset to reach a 500,000 AuEq Zambia 19 by Newmont). On September 1st, Le- seen positive results at Tambomayo, Oz/y target.” andro García replaced Víctor Gobitz as and improved efficiency in the under- In December 2019, Gold Fields became World total (rounded) 870 Buenaventura’s new CEO after it was ground mine at Uchucchacua resulted the first open pit mining company in

PERU MINING 2020 32 Industry Explorations Global Business Reports 33 PERU MINING 2020 INTERVIEW Global Business Reports Industry Explorations EDITORIAL

our waste dam, and we are now at a we are exploring throughout the coun- stage where we can start construction. try. Peru to obtain the ISO 45001:2018 certi- We aim to extend Cerro Corona’s mine fication for its Cerro Corona operation, life to 2034 and, in 2020, we will con- Considering the current strength of awarded due to its emphasis on safety. tinue with a scoping study to achieve gold, will Gold Fields have a stronger Elaborating on Gold Fields’ priorities this goal. focus on exploration, and which re- moving forward, Rivera added that key In addition to our Cerro Corona project, gions does the company see as hav- areas of focus include water steward- we are exploring other areas in South- ing high potential for discovery? ship, mine closure and the reduction ern and Central Peru. We have secured Approximately four years ago, Gold of carbon emissions and energy usage. a 16% stake in Chakana Copper, but this Fields decided to reduce its explora- “All of our operations are certified to project is operated by an independent tion budget and we had no exploration the ISO 14001 standard and are fully management partner. activities in the Americas. In 2019, the compliant with the International Cya- company changed its strategy and al- nide Management Code. For example, What engineering needs to be done located a budget for exploration and Gold Fields does not use mercury for at the Cerro Corona project to ex- M&A in the Americas and appointed the beneficiation of gold or in any of its tend the mine life to 2034? a new exploration manager. We have processes.” Luis A substantial amount of innovation has always been focused on gold, but are Another of Peru’s US$1 billion+ market been implemented in our proposal also starting to expand our interest into cap precious metals producers, Hoch- and we are looking towards new tech- copper in the Americas, considering schild Mining, had to cut its 2020 pro- Rivera nologies and digitization to achieve the the geological potential. duction guidance to 280,000-290,000 mine life extension goal. With regards gold equivalent ounces, with AISC rais- to our tailing’s facilities, a lot of detailed Gold Fields is the first open pit mi- ing slightly to US$1,250-US$1,290 AuEq engineering is necessary. The tailings ning company in Peru to receive the Oz, due to lockdowns in Peru and Ar- Executive Vice President – Americas and waste management designs and ISO 45001 certification for work- gentina. However, with operations now GOLD FIELDS engineering are being completed as place safety. Can you elaborate on back to almost full capacity at its Pallan- part of a feasibility study. the company’s focus on safety? cata and Inmaculada mines, president Safety is one of Gold Fields’ core values and CEO Ignacio Bustamante expects How does Cerro Corona compare to and our motto is that, if it is not safe, Hochschild to deliver a solid second Gold Fields’ other global projects in we do not operate. Our safety index half of production with strong cashflow terms of production, cost and profit- has improved significantly over the last generation. » ability? five years, but we continuously strive to Elaborating on measures taken to ex- Gold Fields’ South American opera- improve safety standards and measures tend the mine life at Inmaculada, Busta- tions have the company’s lowest run- even further. Gold Fields strives for zero mante highlighted drilling campaigns ning costs in the world. The net profit harm at all of its operations worldwide that discovered 50 million ounces of Our Peru business contributes coming out of Peru is 21% of the com- and we aim to minimize occupational silver north of the Angela vein, with approximately 310,000 ounces pany’s entire profits. Our Peru business health and safety hazards. We want to five main structures – Susana Beatriz, equivalent per year (oz eq/y), contributes approximately 310,000 encourage the entire mining industry to Salvador, Facundo, Noelia and Pilar. At and our objective is to acquire ounces equivalent per year (oz eq/y), have a focus on health and safety be- Pallancata, Hochschild was waiting over and our objective is to acquire another fore they start operating. three years to get the permits required another asset to reach a 500,000 asset to reach a 500,000 oz eq/y, target. for drilling, and then the pandemic hit. oz eq/y, target. How is Gold Fields introducing sus- However, the company now intends What potential do you see from Gold tainable initiatives into its opera- to drill aggressively over the next 12 Fields’ Salares Norte project in Chile? tions? months to extend LOM. Gold Fields has been fortunate with the Gold Fields is the first mining company Expanding on this theme, Bustamante current price of gold as well as foreign in Peru to introduce electric vehicles to affirmed that exploration is the top « exchange rates improving in Chile. This its operational and transportation fleet. pillar in Hochschild’s growth strategy. means that the return on investment on We remain highly committed to the “Brownfield exploration is where we be- the Salares Norte project is going to continual improvement of our environ- lieve we can generate the most value, What were the main highlights from be shorter than the 2.5-year payback mental performance. Key areas of focus by increasing LOM, improving grades, Gold Fields’ Peruvian operations in that was predicted with a gold price include water stewardship, mine closure and allowing us to put certain assets 2019? of US$1,200 per ounce. With Salares and the reduction of our carbon emis- back into production, such as Arcata,” In 2019, Gold Fields completed a fea- Norte, Gold Fields has strategically se- sions and energy usage. All of our op- he said, noting that Hochschild now has sibility study on the Cerro Corona cured a footprint in one of the best mi- erations are certified to the ISO 14001 all of its permits to drill a wide range of project, which now has a mine life until ning jurisdictions in the world. Chile is a standard and are fully compliant with targets including Crespo, Arcata, Co- 2030, achieving a mine life extension of copper producing country, but we are the International Cyanide Management rina, Cochaloma, Pablo Sur and Palca. seven years, as the previous mine life opening the gold market there again. Code. For example, Gold Fields does “I do not recall having a more loaded expectation was up until 2023. In 2019, We aim to continue our operations in not use mercury for the beneficiation of second half of the year with so many authorities approved a modification on Chile for at least another 20 years and gold or in any of its processes. ■ meters to drill,” he concluded. ■

PERU MINING 2020 34 Industry Explorations Global Business Reports 35 PERU MINING 2020 INTERVIEW Global Business Reports Industry Explorations INTERVIEW

Leandro From a mining standpoint, how do you think the Peruvian government has dealt with the pandemic? It was a very atypical situation, but the signals and messages we received from the García government were not clear. Some companies interpreted that they could continue operating to some capacity, while others interpreted that they had to stop. Hoch- schild took a conservative approach, and put the health and safety of its people first, shutting down operations apart from essential care and maintenance, such as water treatment and ventilation. Then, the government took way too long to classify mining as a critical activity for the country. Argentina, where mining is not nearly as important to the economy as it is in Peru, decided to put the sector as a top priority and operations restarted after one month, compared to three in Peru. CEO

BUENAVENTURA What measures have been taken to extend the mine life and Pallancata and Inmaculada? At Pallancata we were waiting over three years to get the permits that were re- Ignacio quired for drilling, and then the pandemic hit. However, we now have more drill Since taking over the position of Buenaventura CEO in La Zanja will become gold-copper producers and not just gold targets than we have ever had, and intend to drill aggressively over the next 12 September, what priorities have been set for the next 12 producers. months to extend the life of mine (LOM). At Inmaculada, we began our first drilling months? Bustamante campaign outside of the Angela vein in 2018, finding over 1 million ounces of gold, First, in 2020 due to the effect of Covid-19, our main focus has What is the current status of the San Gabriel gold project? albeit at a lower grade than Angela. In 2019, the focus was on grade, and we found been on preserving cash. We have refinanced our syndicated San Gabriel is in Moquegua, at the south of Peru. It is a project a new area north of Angela with five main structures – Susana Beatriz, Salvador, loan, obtaining a 30-month period of grace, and postponed for an underground mine that belongs 100% to Buenaventura. Facundo, Noelia and Pilar. With this discovery we were able to find another 50 mil- our 2020 dividend payment until we have more visibility about The EIA is approved and we have the land agreements in place, lion ounces of silver, as well as improving the average grade of our new resources. the current situation. We are currently working on refinancing however we are facing some delays due to the prior consulta- In 2020, we are focusing on finding additional potential areas, adding inferred the US$115 million balloon payment of Huanza’s leasing that tion process. We hope we can have this done by the end of resources and converting as many inferred resources as we can to measured and we expect to close in November. 2020. During the last year, we solved the issues regarding rock indicated resources and to reserves. President & CEO Regarding our own operations, which are the locomotives of quality, so we are ready to take an investment decision if the our company's development, the plan is to continue increas- prior consultation process goes well. HOCHSCHILD MINING 2020 has been a political rollercoaster for Peru, with numerous changes to ing efficiencies in order to continue generating value for our the Ministry of Energy and Mines. What do you think are the main challenges shareholders. Last but not least, as you know, the continuity of What was the rationale behind your recent investment in facing the newly elected officials? mining lies in exploration. For this reason, going forward we will Tinka Resources? We have the highest respect for both Luis Miguel Incháustegui and Jaime Gálvez continue to focus our efforts on the exploration and develop- The company’s vision is to have assets that can be in produc- because of their history in the mining and public sector, and are enthusiastic about ment of new mines. By doing this we can give sustainability tion for at least 10 years. Ayawilca is a high-grade zinc project, the positive attitude they have shown at the start of their new roles. The main to our company, always putting safety first, respecting the co- equidistantly located between El Brocal and Uchucchacua. In challenge the government has is to accelerate the permitting times, particularly to mmunities that host us and caring for the environment. both plants we have the capacity to produce lead and zinc con- clarify the issues surrounding the prior consultation, which is in dire need of fixing. centrates. » The Ministry of Environment is also very important for the mining industry, and How is the debottlenecking program progressing at Bue- Therefore, it makes sense to think that Ayawilca, rather than must work in unison with the Ministry of Energy and Mines and the private sector naventura’s main operations? being developed as a standalone project, could be developed to help regain Peru’s competitiveness. The program is moving along well. We have had very good as a satellite mine to feed those plants. El Brocal has a plant Brownfield exploration is where I am convinced that the only way that you can ensure long-term sustainability be- results in Tambomayo, where we have simplified the metallurgi- capacity between 18,000 and 20,000 mt/d, while Uchucchacua tween mining and local communities is through a long-term mutual agreement cal process while we have also optimized mine preparation. In is a 4,000 mt/d plant with an EIA approved to go to 6,000 mt/d, we believe we can generate the between them. It is a road to nowhere if government is trying to impose certain Uchucchacua we have improved efficiency in the underground although we are still at an engineering phase before we ap- most value, by increasing LOM, things when either of the parties is not in agreement. The government should play mine as well, and in both mines the program is resulting in sig- prove this expansion. improving grades and allowing the role of facilitator when required, set the tone, and increase efficiency. nificant cost savings. Orcopampa is a different case, because us to put certain assets back into we have resized the operation, and a big focus now is on the How are base metals playing an increasing role in Bue- Looking ahead, what are Hochschild’s priorities and what is the company’s production, such as Arcata. I do exploration front in order to increase the LOM. Finally, at Mar- naventura’s production profile? growth strategy? capunta we should reap the benefits of the program by the end Buenaventura has a 67-year history. It started in silver, with Jul- not recall having a more loaded Exploration is the top pillar in Hochschild’s growth strategy, which also includes of 2020 and beginning of 2021. cani; then the focus was strongly on precious metals, with seve- second half of the year with so brownfield, greenfield, early stage projects and M&As or JVs. In the case of Brown- ral mines across the country, and of course Yanacocha. Then the field exploration is where we believe we can generate the most value, by increas- many meters to drill. To what extent is declining gold production being offset by company invested in copper and base metals with Cerro Verde ing LOM, improving grades and allowing us to put certain assets back into produc- higher gold prices? and El Brocal, so today’s production profile is quite diversified. tion, such as Arcata. I do not recall having a more loaded second half of the year Buenaventura’s gold production profile follows the declining The idea is that Buenaventura should be a long-lasting invest- with so many meters to drill. trend of the Peruvian gold segment. We are seeing production ment vehicle with consistent financial results. In this respect, Hochschild also plans to be active in M&A across the Americas in jurisdictions that fall in Orcopampa and La Zanja. Yanacocha’s production did today our main focus is on gold and silver with an important have the right mix of geological potential plus a solid economic and political en- not decrease in the past year but it will over the next years. So, contribution of copper, mainly due to Cerro Verde but in the « vironment. This could be through a JV, like in the case of Snip, Pallancata and San in the medium term, San Gabriel will be a key project for us as future, we expect to have more contribution of copper than Jose, but also through outright acquisition if the conditions allow a good return for it will be a breaking point, while Yanacocha, Tantahuatay and today, mainly due to our current pipeline of projects. ■ our shareholders. ■

PERU MINING 2020 36 Industry Explorations Global Business Reports 37 PERU MINING 2020 EDITORIAL Global Business Reports Industry Explorations INTERVIEW

Zinc of concentrate the company had during in Yauyos province, Peru. Igor Gonzales, reaching a level of approximately 90% What support has Nexa given to the the care and maintenance period. Fur- Sierra Metals’ former CEO (replaced production capacity across our mines in communities surrounding its Peruvian thermore, he explained how the com- by Luis Marchese on June 1st, 2020), Peru. As Nexa runs underground mining operations during 2020? pany’s focus on innovation has helped elaborated on the operational improve- operations (where remote work is more Nexa operates all over Peru, and we are THE Q3 2020 REVIVAL it adapt to new working conditions, by ments made at Yauricocha: “The Yauri- complicated than at open-pit mines), the main source of income for the co- utilizing its open innovation platform, cocha mine is now fully mechanized. We the health and safety protocols that mmunities in these areas. Since March, HAS BROUGHT A TIMELY Mining Lab, to look for the best ways also completed the Yauricocha tunnel, have been implemented mean produc- we have delivered over 400 oxygen cyl- BOOST TO PRODUCERS to track and trace workers. “Nexa’s in- which connects all of our underground tion is likely to remain at 90-95% for the inders, 12 respirators, and thousands of novations have been oriented to reduce workings with the processing facility. rest of 2020, as returning to full capacity PPE to the communities and the health the number of workers needed in an un- We installed a welded rail line so that will probably require a vaccine. sector, as well as over 11,000 food par- derground operation. By definition, un- trains can travel at a higher speed and cels. It was due to the logistics supply The theme of base metal revival in the derground mining has risks associated, we are purchasing larger locomotives How has Nexa’s focus on innovation chain set up for the mining industry that second half of 2020 continues with zinc, and the move towards more automated, and haul cars to allow us to move waste helped the company adapt to new this emergency response was quick, which descended to a 5-year low of remote work has been developed long and ore faster.” working conditions? and it has reinforced the importance of US$0.82/lb on March 25th, as the pan- before the pandemic,” said Porto, giv- Despite the impact of the pandemic, In general, Nexa’s innovations have mining to the country. The pandemic demic decimated demand, but then fol- ing the example of digital temperature Sierra Metals reported an adjusted Ricardo been oriented to reduce the number has also reinforced the value of working lowed an upward trend to trade above scanners with cameras as one of a num- EBITDA of US$12.6 million in Q2 2020 of workers needed in an underground in conjuncture with communities. For US$1.10/lb in August and September. ber of new technologies implemented. in-line with Q2 2019, as lower revenues operation. By definition, underground example, there are various communi- Zinc production in Peru went down by Looking forward, Porto affirmed that due to Covid government mandated Porto mining has risks associated, and the ties near Nexa’s Pasco mining complex 4.39% in 2019, and will certainly see a Nexa’s investment plans for Peru have curtailments were partially offset by re- move towards more automated, remote and we worked with them to implement, further decrease in 2020, as the primar- not been impacted by the pandemic. duced operating costs. “Metals prices work has been developed long before train and support the new health proto- ily underground mines where it is ex- The first project in the company’s Peru- have strengthened at the start of the President & CEO the pandemic. When Covid-19 arrived, cols during the lockdown. tracted make remote work and social vian development pipeline, Magistral, third quarter especially for copper and NEXA RESOURCES PERÚ these technologies become even more distancing more challenging than at is in advanced pre-feasibility stage, precious metals. We are optimistic important. At the same time, we utilized How do you view the current perfor- open-pit operations. Indeed, Ricardo which Nexa hopes will be finalized by that with improved operating efficien- our open innovation platform, Mining mance and fundamentals of zinc? Porto, CEO of Nexa Resources, indi- the beginning of 2021 before taking a cies and potential higher metal prices Lab, to look for the best ways to track Since May, zinc has rebounded well and cated that due to new health and safety construction decision. “Peru is without we will see a stronger second half for and trace workers. Many providers ap- at this moment, is the best performing protocols, returning to full capacity will doubt the main area of focus for Nexa 2020,” said Luis Marchese, in a state- » proached us with interesting solutions, base metal. While there is a current sur- probably require a vaccine. However, moving forward as we view it as the mi- ment on August 13th. and we are implementing a number of plus of zinc metal, the market has begun he did mention that after ramping up ning jurisdiction of the future,” revealed Furthermore, operational improve- By definition, underground new technologies including digital tem- to understand that the supply of zinc at the beginning of Q3, Nexa’s Peruvian Porto. ments at Yauricocha have been made in perature scanners with cameras. concentrate is not as robust as previ- mining has risks associated, mines were back to approximately 90% Another of Peru’s zinc producers is preparation for the company’s flagship ously thought. Surplus should remain production capacity. Porto related how diversified precious and base metals asset to increase capacity by 20% once and the move towards more There has been some criticism of the throughout 2020 as smelters have been Nexa maintained a level of production company Sierra Metals, with produc- permits for the expansion have been automated, remote work has Peruvian government with regard to active even while some mines have at Cajamarquilla with the smelter run- tion from two mines in Mexico and its acquired, bringing the mine from 3,000 been developed long before the length of the lockdown for mining been shut down. However, looking fur- ning during lockdown using the stock flagship Yauricocha underground mine mt/d to 3,600 mt/d by 2021. ■ companies. Do you feel they should ther ahead, infrastructure-based stimu- the pandemic. When Covid-19 have allowed operations to restart lus packages to help revive economies arrived, these technologies more quickly? will push demand up and offset the re- I would say that hindsight is 20/20, and duction in demand from the automotive A Joint Venture with become even more important. We are the world leader in mine and it is easy to look back and suggest what sector. tunnel ventilation systems with +50 could have been done better. Nexa years of experience. started holding daily crisis meetings What is Nexa’s vision in Peru for the We produce and deliver all kind of « on March 7th, and the global protocols coming years? flexible and semi rigid polymer ducting, and advice from leading health officials Peru is without doubt the main area of high-efficiency fans, accessories, and have changed dramatically since then. focus for Nexa moving forward, as we different ventilation control solutions. To what extent have Nexa Resources’ Furthermore, in a country where 70% view Peru as the mining jurisdiction of Ventilation Peruvian operations been impacted of work is informal, maintaining a quar- the future. Our Aripuanã project in Bra- by the pandemic? antine for a long period is a huge chal- zil is currently under construction and Now (September 2020) operations are lenge. Perhaps the authorities might is the immediate priority for Nexa, but Systems stable, but we certainly suffered during have done some things differently if despite delays, the company has not For Mining and Tunneling the lockdown. We managed to maintain they had hindsight, but in my opinion, changed its investment plans in Peru. a level of production at Cajamarquilla by prioritizing the health of its citizens, The first project in our Peruvian devel- with the smelter running, using the the Peruvian government acted correct- opment pipeline is Magistral, which is in stock of concentrate we had during the ly. Covid-19 is certainly not just a little the advanced pre-feasibility stage that www.dsiventilation.com care and maintenance period. Q2 was flu. From a health and safety standpoint, we hope to finalize by the beginning [email protected] heavily impacted, but we have ramped it was made clear what was required at of 2021 and take a construction deci- up since the beginning of Q3, now an early stage. sion. ■

PERU MINING 2020 38 Industry Explorations Global Business Reports 39 PERU MINING 2020 MAP Global Business Reports Industry Explorations MAP

Peru' Main Producing Mine

Copper, Molybdenum, Silver, Lead, Zinc Antamina (BHP-Glencore-Teck-Mitsubishi) TUMBES Copper, Molybdenum, Gold, Silver MMG-Guoxin-CITIC IQUITOS Copper, Molybdenum, Silver Southern Copper Copper, Molybdenum Southern Copper Copper, Gold, Silver Glencore Copper, Molybdenum Cerro Verde (Freeport-Sumitomo-Buenaventura) Copper, Silver, Lead, Zinc Nexa Resources Copper, Silver, Lead, Zinc Nexa Resources Copper, Silver, Lead, Zinc Nexa Resources Copper, Silver, Lead, Zinc El Brocal (Buenaventura) PIURA Copper, Gold, Silver Southern Peaks Mining Copper, Molybdenum, Silver, Lead, Zinc Chinalco Copper, Silver, Lead, Zinc Sierra Metals Copper, Silver, Molybdenum Hudbay Minerals MOYOBAMBA CHACHAPOYAS Gold, Silver Yanacocha (Newmont-Buenaventura-Sumitomo) Gold Barrick Gold, Silver Barrick CHICLAYO CAJAMARCA Gold, Copper Gold Fields Gold, Silver Buenaventura Gold, Silver Caraveli Gold, Silver Coimolache (Buenaventura-Southern-Espro) Gold, Silver La Zanja (Buenaventura-Newmont) TRUJILLO PUCALLPA Gold, Silver Pan American Silver Gold, Silver Pan American Silver Gold C.M. Horizonte Gold, Silver Retamas Gold, Silver Laytaruma Gold, Silver Aruntani HUARAZ Gold, Silver Anabi HUÁNUCO Gold, Silver Apumayo Gold, Silver Minsur Gold, Silver Poderosa Gold, Silver Buenaventura CERRO DE PASCO Gold Los Andes Peru Gold Gold Yanaquihua Silver, Zinc, Lead Buenaventura Silver, Gold Buenaventura Silver, Gold Hochschild HUANCAYO Silver, Gold Hochschild Lima Silver, Gold Hochschild CALLAO Silver, Lead, Zinc, Copper Pan American Silver PUERTO MALDONADO Silver, Zinc Pan American Silver Silver, Lead, Zinc Fortuna Silver HUANCAVELICA AYACUCHO Silver, Lead, Zinc Volcan (Glencore) Silver, Lead, Zinc Volcan (Glencore) CUSCO Silver, Lead, Zinc Volcan (Glencore) Lead, Zinc, Copper, Silver Glencore ABANCAY ICA Zinc, Lead Tra gura Silver, Lead, Zinc Casapalca Silver, Lead, Zinc Colquisiri Lead, Zinc Mitsui Lead, Zinc, Silver Buenaventura Zinc, Lead, Silver Trevali Zinc San Ignacio de Morococha Copper, Silver, Lead, Zinc Raura PUNO Iron Shougang Phosphate Mosaic-Mitsui AREQUIPA Tin Minsur Copper Anglo American-Mitsubishi (under construction) Copper Marcobre (Minsur-Alxar) (under construction) Copper, Silver, Zinc Southern Peaks Mining (under construction) MOQUEGUA PERU MINING 2020 40 Industry Explorations Global Business Reports 41 TACNA GBR • Industry Explorations • PERU MINING 2020

JUNIOR EXPLORATION

"By 2021, we would like to see the downward trend in exploration investment reversed and hopefully new discoveries announced. There is a lot of interest in Peru due to its geological potential and economic stability, but we need to iron out the regulatory permitting challenges that remain as soon as possible."

- Manuel Fumagalli, President, National Society of Mining, Petroleum and Energy (SNMPE)

Images courtesy of Regulus Resources FACTSHEET Global Business Reports Industry Explorations EDITORIAL

TOTAL MINING INVESTMENT IN PERU standpoint, Latin America represents Junior Source: MINEM » 23% of mining issuers on TSXV, second Billion US$ only to Canada with 45%. The man in Exploration 13 charge of leading this growth is Guil- 12 11 laume Légaré, head of South America 10 In the next 50-100 years copper for the TSX and TSXV, who outlined the 9 will play a role in global industrial reasons for choosing Lima as a base: 8 “We chose Peru as a base because it 7 6.16 and urban expansion like the oil is the most important South American 6 and gas sector played for the last 5 mining market for our exchanges. In CUMBERSOME 4 100 years in terms of generating, Peru, there are 57 companies listed on 3 2.29 PERMITTING IS HOLDING 2 storing and distributing power. TSX and TSXV that are active in South 1 America with 135 mining properties.” PERU BACK FROM With a goal to support more local man- FULFILLING ITS POTENTIAL 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 agement teams access the Toronto ex- changes’ two-tiered ecosystem, Légaré - Luquman Shaheen, noted that there are different channels EXPLORATION INVESTMENT IN PERU President & CEO, available for accessing capital other Source: MINEM than a traditional IPO. One option is the Panoro Minerals Million US$ Capital Pool Company (CPC) program, 1,000 which introduces experienced investors 900 While mining producers had to adjust to entrepreneurs whose growth and 800 their yearly production forecasts in light development-stage companies require 700 of strict lockdown procedures, Peru’s capital and public company manage- 600 junior community was faced with a new ment expertise. “There are a number 500 set of challenges that compounded of CPC founders looking for mining 400 394 357 « the already daunting task of advancing opportunities in the region; we want 300 projects in a country that has seen ex- of the government’s commitment, Cauti to bring investment opportunities from 200 ploration budgets decrease for the pre- pointed to the decree of urgency enact- LatAm to these founders, and better 100 vious three years, dropping 13.5% from ed on December 27th, 2019, that grants communicate the different options for US$413 million in 2018, and to US$357 the definitive rebate of VAT for the next raising capital to potential issuers," he million in 2019. Buoyant metals prices in 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 three years. “Furthermore, we reinstat- explained. early 2020 offered fresh hope for down- ed legislation that allows companies One such CPC is Magnitude Mining, trodden explorers; hope which was be approved and with ongoing social been doing the proper work,” he said, that invest large amounts in the country which entered into an agreement for soon dashed by the Covid-19 wrecking challenges, this is testing the friendship observing that instead of following the to perform accounting in US dollars,” a qualifying transaction with gold-fo- ball that caused drilling programs to be between the jurisdiction and juniors,” prior consultation process, companies added Cauti. cused junior Pucara Resources in March put on hold. A remarkable rebound in he said, adding that Peru has to be ag- have been looking for ways to avoid it. Manuel Fumagalli, president of the Na- 2020. Since they were already trading metals prices has renewed optimism in gressive in combatting corruption to “The government needs to see where tional Society of Mining, Petroleum and on the TSXV, an RTO was the most ef- the junior sector in Q3 2020, but Peru attract more investment into its explo- there is potential and act quickly, be- Energy (SNMPE), was keen to empha- ficient and cost-effective way for Pucara needs to iron out the cumbersome per- ration sector. cause investors are tired of waiting two size the intention of the mining authori- to go public, according to Steve Zuker, mitting processes that have negatively This has been reflected in the mem- or three years to know if there really is ties to push for change, revealing that president and CEO of the new entity impacted its competitiveness as a juris- bership of the Canada Peru Chamber potential and cannot continue to invest the SNMPE is working with the gov- – Pucara Gold – which went public in diction. of Commerce (CCCP), according to its if they are uncertain there will be a suf- ernment to streamline the permitting October 2020 under the ticker TORO. Looking at Ministry of Energy and general manager Carla Martínez, with ficient or a timely ROI,” stated Jorge process, as the discussion to move the “We will focus our exploration efforts Mines (MINEM) statistics, although in- the number of junior participants de- Granda, general manager of AK Drill- ILO Convention 169’s prior consultation on high-sulphidation epithermal gold vestment into Peru’s mining industry creasing in recent years. “To reignite ing, who remarked that, as Peru loses (consulta previa) from the exploration deposits, as this is our expertise and increased by over 20% in 2019, explora- the interest of the junior mining com- its competitiveness, funds go to other stage to the feasibility mining project there are only a handful of companies tion was the one area which went down, munity, permitting and authorization jurisdictions. development stage gathers pace. in Peru focused on grassroots explora- as permitting issues delayed drilling times must be reduced,” she affirmed. Even before the pandemic, the lead- Drilling permits and exploration licens- tion,” explained Zuker. campaigns, thwarting exploration activ- Fernando Pickmann, partner at global ing authorities in Peru’s mining indus- es mean little to juniors without access ity. Paul Murphy, manager of the South law firm Dentons and president and try were vocal in their acknowledge- to capital, and in this respect, the Ca- America region for technical consulting COO for Regulus Resources, believes ment that the climate for exploration nadian money markets hold significant Rising base metals prices rejuvenate firm Mining Plus, has noticed the wor- there is a double liability for why per- must become more attractive if Peru influence. In early 2019, the Toronto Peruvian exploration rying trend in junior activity: “Peru is mits have been taking so long: “Some is to maintain a healthy project pipe- Stock Exchange (TSX) and TSX Venture just too well endowed geologically to of the delays are due to a lack of capac- line. Augusto Cauti, ex-Vice Minister Exchange (TSXV) made a strategic de- Despite the bleak backdrop of a turbu- ever be ignored by explorers, but in the ity to grant permits, but some of the re- of Mines (until August 6th), stated that cision to establish a full time presence lent first half of the year, the summer of current climate, where drill permits are sponsibility must also fall with the com- stimulating exploration is a prime gov- in Lima to explore new opportunities 2020 has breathed new life into Peru’s taking a considerable amount of time to panies looking for permits who have not ernment objective in 2020. As evidence across South America. From a mining junior community. For a start, metals

PERU MINING 2020 44 Industry Explorations Global Business Reports 45 PERU MINING 2020 EDITORIAL Global Business Reports Industry Explorations THOUGHTS

THE ISSUE OF PERMITTING prices have flourished since the mid- companies is an indication of the direc- ra, Gold Fields’ executive vice president March liquidity crunch that saw inves- tion Peruvian mining is headed, with for the Americas. tors sell stocks en masse. By Septem- base metals receiving greater interest With gold-focused industry heavy- I am hopeful that the coronavirus crisis and its dramatic impact on the economy will ber, copper had reached a two-year from investors as precious metals pro- weights such as Barrick CEO Mark Bris- prompt the right reaction by the government so that the exaggerated approach high of over US$3.10/lb, silver a seven- duction continues to decline. tow declaring he believes copper will towards prior consultation is changed. In this recessive scenario, we need the year high of over US$28/oz), and gold Despite a booming gold market, the be “the most-strategic metal on this government to take bold, disruptive actions to facilitate investment. remained in the US$1,900 range, just trend of precious metals producers in- planet” in a decade, and a lack of un- shy of its all-time high of US$2,070 hit in vesting in base metal juniors is evident developed gold assets large enough to - Oscar Díaz, CEO, Viceversa Consulting August. Even zinc rebounded robustly, in Peru. In January 2020, Tinka Resour- satisfy big producers, copper offers the recovering from a low of US$0.82/lb in ces raised C$18.5 million through a stra- upside linked to the impending electri- March to reach US$1.13/lb in Septem- tegic partnership with Buenaventura, fication movement, as well as the type ber. which bought a 19.3% stake in the com- of assets that guarantee long-term pro- To illustrate how the tide has turned for pany at a remarkable 100% premium to duction. The government needs to see where there is potential and act quickly, because the Peruvian junior community, we can the share price when it was announced. While the short term outlook for copper investors are tired of waiting two or three years to know if there really is potential examine the share price appreciation of This was the second in a line of strategic appears volatile, the bullish long term and cannot continue to invest if they are uncertain there will be a sufficient or three of the leading juniors in Peru from financings by precious metals players in market consensus should hold Peru in March 16th (the first day of lockdown in Peru following the May 2019 announce- good stead for years to come. “In the a timely ROI. By losing these opportunities, Peru loses its competitiveness and Peru) through to September 16th, ex- ment that Gold Fields had completed next 50-100 years copper will play a role these funds go to other countries. Permitting must be sped up in order to recover actly six months later. Regulus Resour- a C$8 million investment for a 16% in global industrial and urban expan- opportunities for revenue and business that we are currently leaving on the table. ces moved from C$0.55 to C$1.62 (up stake in Chakana Copper. “We have sion like the oil and gas sector played 195%); Chakana Copper moved from always been focused on gold, but are for the last 100 years in terms of gener- - Jorge Granda, General Manager, AK Drilling C$0.10 to C$0.75 (up 650%); and Tin- also starting to expand our interest into ating, storing and distributing power,” ka Resources was up 122% during the copper in the Americas considering the predicted Luquman Shaheen, president same period. The profile of these three geological potential,” stated Luis Rive- and CEO of Panoro Minerals. ■

I believe there is a double liability for why things have been taking so long. Some INTERVIEW of the delays are due to a lack of capacity to grant permits, but some of the responsibility must also fall with the companies looking for permits that have not been doing the proper work. Instead of following the prior consultation process, Guillaume Why was Lima chosen as TMX Group’s South American base? companies have been looking for ways to avoid it. We chose Peru because it is the most important South American mining market for our Exchanges. There are 478 mining companies in Latin America listed on TSX - Fernando Pickmann, Partner, Dentons Gallo Barrios Pickmann Légaré and TSXV, with 1,045 mining properties. In Peru, there are 57 companies listed on TSX and TSXV with 135 mining properties. Latin America represents 19% of mining issuers on TSXV, second only to Canada with 48%. Our goal is to support more local management teams to access our unique two-tiered ecosystem. Head – South America A common problem is the different evaluation criteria and interpretations of the TORONTO STOCK EXCHANGE TSX already has an agreement with the Santiago Stock Exchange (BCS). Is authorities regarding legislation and technical requirements for mining projects. (TSX) this a model you intend to mirror with other stock exchanges in the region? The criteria can be different, not only between agencies, but also between the Our main objective is to allow our listed clients to have access to new pools of TSX VENTURE EXCHANGE professionals in the same agency. I believe that evaluation criteria for permitting capital, and to optimize access to capital. We are close to the local exchanges in (TSXV) has to be standardized and that the regulatory framework should be extensively the region and a number of companies have taken advantage of the dual-listing approach. We have a unique two-tiered ecosystem that utilizes the public venture simplified to achieve a more predictable permitting process. capital model approach, which is something companies need right now. There is already the MILA (Latin American Integrated Market) exchange agreement, which - Jorge Chávez Blancas, General Manager, EnvPhys allows investors access to companies should they come via Mexico, Peru, Colom- bia or Chile. We will be working with the local exchanges in the region to make sure this is made as efficient as possible.

What are some of the alternative ways to raise money besides an IPO? There is interest from investors to finance projects, but the system is failing the Unique listing vehicles such as the Capital Pool Company (CPC) program give mining industry with regards to excessive regulations, such as the requirement of Venture companies greater access to capital. The CPC program introduces expe- prior consultation for an exploration project that makes minimal environmental rienced investors to entrepreneurs whose growth and development-stage com- impact. Peru is still the most stable country in Latin America, but the permitting panies require capital and public company management expertise. There are a times are causing investors and juniors to look elsewhere. number of CPC founders looking for mining opportunities in the region. We want to bring investment opportunities from LatAm to these founders, and better com- municate the different options for raising capital to potential issuers. ■ - Steve Zuker, President & CEO, Pucara Gold Ltd.

PERU MINING 2020 46 Industry Explorations Global Business Reports 47 PERU MINING 2020 EDITORIAL Global Business Reports Industry Explorations EDITORIAL

Images courtesy of Regulus Resources The Regulus management team has already had success with per year, and this requires no capital raising or stock dilu- Copper Antares Minerals, which was sold to First Quantum for C$460 tion,” explained Luquman Shaheen, president and CEO. million in 2010, and Black believes they have the same scale Panoro has royalties in projects sold, such as a 2% royalty of project or better with AntaKori. “We have already demon- on the Kusiorcco project sold to Hudbay, located near their strated a sizeable resource with great opportunity for expan- Constancia mine, and the Cochasayhuas project sold in June sion. We have the security of a solid investment premise on 2020 to Peruvian company Mintania In 2020, for which Pan- PERU HAS A NUMBER OF PROMISING the known deposit, but also the benefit of additional explora- oro is due US$2.5 million over the next two years while retain- tion upside,” concluded Black. ing a 5% royalty. Later this year, Panoro intends to drill the PROJECTS LOOKING TO CAPITALIZE ON Another of the Canadian juniors active in Peru, Chakana Cop- Chaupec and Guaclle targets at its Cotabambas copper-gold A REVITALIZED MARKET per, used the investment received from Gold Fields in May project, revealed Shaheen. 2019 to start a 20,000 m drill program at its Soledad proj- GlobeTrotters Resource Group is another of the prospect ect in June 2019, with the aim of testing numerous targets generators active in Peru, and recently acquired the Can- and completing definition drilling on additional mineralized delaria brownfield project, located approximately 25 km breccia pipes, according to president and CEO, David Kelley. southeast of Cerro Verde. Richard Osmond, GlobeTrotters’ Considering the scarcity of sizeable junior copper assets After drilling 5,700 m of the program in 2019, Chakana made president, elaborated on the advantages of the company’s globally, a name frequently brought up as a buyout candidate the decision to halt drilling and wait until an expansion of its business model: “In the past 5 years alone we have noticed a is Regulus Resources, whose AntaKori project has produced drill permit had been granted to allow access to other parts substantial turnover in the exploration teams for most of the five of the top 20 copper intercepts reported worldwide over of the property that have not been drilled yet. Kelley spoke major mining companies exploring in Peru. This makes it very the last two years with mineralization close to surface, ac- of how Soledad is evolving from a mineralization standpoint: difficult for the majors to compete with expert teams who cording to John Black. Black provided an update on the com- “Looking at the value of what we have drilled up to date, ap- have been focused on project generation in Peru for more pany’s phase II drill program, mentioning that the focus has proximately 60% of the value sits in gold and silver and the than a decade.” been to extend the mineralization, mostly to the north of the remaining 40% sits in copper. I believe as we go deeper, cop- A new copper-focused junior entered the Peruvian market on project. He also noted that the resource already announced per will become more dominant.” February 25th 2020, as C3 Metals (formally Carube Copper has given Regulus a strong foundation to build upon, with When asked about the potential scale of the project, Kelley Corp) finalized the share-for-share acquisition of Latin Amer- 250 million mt of 0.48% copper and 0.29 g/mt gold in the outlined Chakana’s initial target for publishing a resource is ica Resource Group (LARG) and its flagship Jasperoide cop- indicated category and 267 million mt of 0.41% copper and 10 million mt, which will allow for investor confidence and put per-gold project. Jeff Ackert, C3’s vice president of business 0.26 g/mt gold in the inferred category. the company in a position to raise money to continue aggres- development, highlighted Jasperoide’s premium location in sive exploration. “There are approximately 40 to 50 breccia the Andahuaylas-Yauri belt, which hosts several large produc- pipes. Each breccia pipe varies in size and we have confirmed ing copper-gold-molybdenum deposits including Las Bam- that the breccias become bigger at depth. We have never on have turned into successful, long term companies, and bas (MMG), Antapaccay (Glencore) and Constancia (Hudbay). seen the bottom of a breccia pipe, even though our deepest we are looking to repeat this success in the copper sector at Regarding the focus of the Ontario-based junior, which also breccia intercept is over 700 m.” Camino.” has projects in Jamaica, British Columbia and Nova Scotia, One of the previously active juniors that has returned with a One of the longest running juniors in Peru is Panoro Minerals, Ackert affirmed that the majority of exploration dollars will be makeover in 2020 is Camino Corporation (Camino), with new which followers a prospect generator model, preferring to directed towards Jasperoide in 2020: “The ability of explo- president and CEO Jay Chmelauskas appointed at the begin- advance its portfolio of projects with strategic partners rath- ration companies to make discoveries and put projects into ning of 2020. Chmelauskas has previous experience advanc- er than risk dilution from equity raises. “Through Panoro’s production in Peru is testament to how the government and ing projects through development, including Jinshan Gold partnerships with Wheaton Precious Metals (WPM), Jogmec, mining community has put the country on the map as a lead- Mines (now China Gold International), that developed one Hudbay and Mintania we receive approximately US$5 million ing jurisdiction, especially for copper.” ■ of China’s largest gold mines in inner Mongolia, and West- ern Lithium (now Lithium Americas), advancing one of North Americas’ largest lithium deposits. “Camino’s previous drill results from 2017 indicated the potential scale and grade for a copper mine,” said Chmelauskas, who had been looking for early-stage projects in good jurisdictions due to copper’s role in the electrification transition and a lack of new discov- eries in the copper space. “My business partner, Keith Peck, was involved with the development of the Franke copper mine at Chilean copper producer Centenario Copper, and we now believe the Los Chapitos could be similar,” he stated, speaking of Camino’s flagship asset in Arequipa. Camino has identified up to four areas of copper, includ- ing copper/gold mineralization at Los Chapitos (a large land package of 220 km2) that the company intends to test this fall. Additionally, field work has already commenced at the company’s high grade copper-silver project, Plata Dorada. “By August 2021, we aim to have a maiden resource for Los Chapitos and a larger portfolio of assets within Camino,” said Chmelauskas, before declaring: “The projects I have worked

PERU MINING 2020 48 Industry Explorations Global Business Reports 49 PERU MINING 2020 INTERVIEW Global Business Reports Industry Explorations INTERVIEW

Can you provide an update of Chakana on to breccia pipe 5 where we had a target How is Soledad evolving from a mineral- David Copper’s phase III drill program at the set out on the east side, which achieved ization standpoint? John Soledad project? some of the highest grades we have seen The commodity mix at Soledad is really in- Chakana Copper started a 20,000 m drill in this pipe. We were able to extend the teresting as we have copper grades up to Kelley program at the Soledad project in June mineralization to depth which gives us 10%, gold grades over an oz/mt, and silver Black 2019 with the aim to test numerous tar- more volume and significantly improved grades up to 5 kg/mt. This gives an indica- gets and complete definition drilling on the copper grades. All of the breccia pipes tion of the grade potential of the nature additional mineralized breccia pipes. We we have drilled thus far are open at depth. of the mineralization, being a mix between CEO President & CEO drilled 5,700 m of the program in 2019 and precious and base metals. Looking at the REGULUS RESOURCES CHAKANA COPPER then made the decision to halt the drilling In 2019, Gold Fields invested C$8 mil- value of what we have drilled up to date, and wait until we had an expansion of our lion in Chakana Copper. Can you explain approximately 60% of the value sits in gold drill permit approved to get us into other how the relationship has developed? and silver and the remaining 40% sits in parts of the property that have not been In our initial two years of drilling, we saw copper. This may change over time as we Can you provide an update on the progress on the phase II drill program at the An- drilled yet. some spectacular results which attracted are drilling numerous breccia pipes, which taKori copper-gold project? During drilling, we tested one of our high the attention of several large mining com- have varied commodity ratios. I believe as The phase I drilling program was completed in late 2018, which allowed us to put out a priority targets, breccia pipe 7, which had panies. Gold Fields was the most aggres- we go deeper, copper will become more resource published in March 2019. We moved directly from phase I into phase II, which never been dilled before. It had both an sive in terms of wanting to learn about our dominant. ran throughout 2019. We have completed approximately 16,000 m of what we anticipate excellent geophysical and surface geo- project and was very thorough in their due- will be a 25,000 m phase II program. The focus has been to extend the mineralization, chemistry response. All four drill holes in- diligence, which culminated in an invest- What do you envision for the Soledad mostly to the north of the project. The resource already announced gave us a great start tersected significant mineralization, includ- ment in the company. project moving forward? with 250 million mt of 0.48% copper and 0.29 g/mt gold in the indicated category and ing 31 m of 0.68 g/mt Au, 205.9 g/mt Ag, We are increasingly seeing large precious There are potentially 40 to 50 breccia 267 million mt of 0.41% copper and 0.26 g/mt gold in the inferred category. and 0.23% Cu from 157 m in hole SDH19- metals producers investing in copper pro- pipes on the project and we have never We have had some very eye-catching results on some of our drill holes, for example, drill 111, and 35 m with 0.80 g/mt Au, 53.8 jects. One of the reasons for this is that it is seen the bottom of a breccia pipe, even hole 31 hit 610 m of 0.84% copper with 1.02 g/mt gold, a 1.66% copper equivalent. The g/mt Ag, 0.35% Cu from surface in hole becoming increasingly difficult to replace though our deepest breccia intercept is AntaKori project has produced five of the top 20 copper intercepts that have been report- SDH19-114. We have a lot of enthusiasm reserves in the gold industry and there are over 700m. Chakana Copper’s initial target ed worldwide over the last two years, and with mineralization close to surface. It is pro- and excitement for this particular target. obvious benefits in diversifying your port- for putting a resource out is 10 million mt, ducing very lengthy intercepts that are high grade and indicative of a very robust system. We also performed drilling at breccia pipe folio. Furthermore, mining producers are which will put the company in a position 6, which was necessary to get it to a point looking at ways in which they can extend to raise money to continue aggressive ex- What are Regulus’ plans to drill the newly permitted Anta Norte portion of the where the mineralization could be includ- life of mine, which makes copper projects ploration. ■ AntaKori project? ed in an initial resource. We then moved favorable. The area we refer to as Anta Norte is outside of the immediate agreement that we have with Coimolache, the neighboring operating mine. Regulus thus required a separate drill- ing permit and the related initiation of activity authorization, which we obtained in late November 2019 and March 2020 respectively. Operations were put on hold due to Co- Can you explain how your previous ex- From a regulatory standpoint, in July we a copper mine is possible to finance as a vid-19, however, we recommenced drilling in October 2020, and expect to complete the Jay perience in gold and lithium develop- received all permits and approvals to drill junior company. However, the upside po- phase II drill program in the first half of 2021, which will then provide data for an updated ment led you to become president and Los Chapitos, which will start this fall. On tential for these IOCG systems is up to 500 resource estimate. Drilling will most likely continue directly into a phase III program to CEO of copper junior, Camino Corpora- July 14th, we closed a private placement million mt, with the best comparison being complete definition of new mineralization. Chmelauskas tion (Camino), in January 2020? of C$3 million to fund exploration activi- Mina Justa in Peru, which is about a 400 I had been viewing copper projects for a ties. The first exploration results should be million mt IOCG deposit and is located How is Regulus planning to deal with the arsenic content found in some of the de- couple of years, and came across Camino out by the beginning of December, and about 100km north of Los Chapitos. posit? Corp. at the beginning of 2020, as an early the plan is to drill the project targeting the Currently, approximately 40% of our resource is high arsenic material and about half of the President & CEO stage project in a good jurisdiction. There delineation of a mineable resource. Do you have a final message for the au- project is skarn mineralization with lower arsenic contents. The portion with high arsenic CAMINO CORPORATION is a lack of new discoveries in the copper dience of Global Business Reports? will require additional treatment to be properly processed. We are currently investigating space and Camino’s previous drill results What potential do you see in the Los We re-capitalized Camino to restart explo- a number of techniques that are applied to other projects, including partial roasting and from 2017 indicated the potential scale Chapitos deposit? ration at our Los Chapitos copper discov- pressure oxidation or autoclave processing. and grade for a copper mine. Los Chapitos is envisioned as a medium to ery and to develop a platform to build a large-size IOCG (iron oxide copper-gold) copper company. We have identified up How do you think AntaKori compares to other junior projects? What progress has been made at Cami- discovery. IOCG deposits exist up the to four areas of copper, including copper/ Regulus specializes in acquiring opportunities to drill out and demonstrate very large no Corp. in 2020? coast of Chile and Peru and are typically gold mineralization at Los Chapitos, which copper or copper-gold deposits. We had success with Antares Minerals, which we sold During the pandemic, we completed a not as large as major porphyry deposits, is a large land package of 220 km2. As well to First Quantum and we think we have the same scale of project or better with AntaKori. 100% acquisition of the Los Chapitos but tend to carry higher grade and other as developing the Los Chapitos project, There are very few copper or copper-gold resources the size of AntaKori that are in the project, and we have been advancing Los metal credits. At Los Chapitos, the inter- we are assessing other opportunities to hands of junior companies and therefore potentially available for acquisition. As copper Chapitos by analyzing our database in a cepts have been copper with only trace grow the company. Our second copper demand increases in the next few years, we anticipate that major companies will be moti- comprehensive manner to plan for the amounts of silver based on the 17,500 project, Plata Dorada, is a high-grade cop- vated to acquire an interest in projects like AntaKori. next stage of exploration and drilling. We meters that were drilled in 2017/18. Our per and silver project located 158 km east Regulus offers one of the more exciting copper-gold projects available worldwide. We also engaged with the local community initial exploration target is to get to about of Cuzco. By August 2021, we aim to have have already demonstrated a sizeable resource with great opportunity for expansion. We near Los Chapitos to provide food and as- 20 to 30 million mt of resource. At that a maiden resource for Los Chapitos and a have the security of a solid investment premise on the known deposit, but also the benefit sistance during the COVID-19 shutdown. size, we believe that the capex to develop larger portfolio of assets within Camino. ■ of additional exploration upside. ■

PERU MINING 2020 50 Industry Explorations Global Business Reports 51 PERU MINING 2020 INTERVIEW Global Business Reports Industry Explorations EDITORIAL

What were the main milestones achieved by Tinka Resources in 2019? Tinka Resources was able to put out a PEA for the company’s Ayawilca Zinc Zone Zinc project in mid-2019, based on the resources at the end of 2018 containing ~7 billion pounds of zinc, one of the largest undeveloped zinc deposits in Latin America. We were able to show a robust underground mining project with a 21 year mine life producing both zinc and silver-lead concentrates, with good infrastructure (power, water, roads) and strong community relationships. We also had a successful year in our exploration programs at Ayawilca with the discovery of a new silver zone, ZINC HAS REBOUNDED and we believe that there is a lot more potential to further grow the zinc and silver resources as well as further optimize the project in 2020 and beyond. WELL AFTER A TORRID Another big milestone late in 2019 was Tinka Resources’ strategic investment with START TO THE YEAR Buenaventura. This is a big step forward for the company as it gives a stamp of ap- proval from the biggest mining company in Peru and should provide confidence for our investors. It was also great that our largest shareholder, Sentient, continued to support the company in the private placement.

Graham How will the Tinka Resources and Buenaventura partnership work moving The dire performance of zinc in the first as a result of the Covid-19 pandemic. forward? half of 2020 left some producers oper- “Ayawilca should be the next large zinc Buenaventura has a breadth of mining experience in Peru and in our region of cen- ating at a loss, and zinc-focused juniors development project in the pipeline in Carman tral Peru in particular - they have two mines within a 50 km radius, Uchucchacua and looking to raise money were at the risk Latin America,” remarked Carman, who Brocal, so can provide expert advice and project synergies as well. Buenaventura of severe dilution as share prices fell in indicated that a PFS could be complete will be a strong partner for Tinka given their local knowledge and mining experi- tandem with a demand decimated by by 2022, and, as long as permitting can ence. Buenaventura bought a 19.3% stake in Tinka Resources at a price of C$0.243 Covid-19. However, an impressive re- be completed on time, first production per share, which was a 100% premium to the share price when it was announced. bound in Q3 has injected optimism in at Ayawilca could be in 2024. The net proceeds from the investment with Buenaventura and Sentient (C$18.5 mil- the sector, and Peru, as the world’s sec- Another junior with a path to produce lion), which was closed in January 2020, will be used to advance the Ayawilca proj- ond biggest producer, should benefit zinc concentrates, as well as lead, silver ect through further exploration and development over the next two to three years. from zinc’s improved outlook. “While and gold, is Cerro de Pasco Resources CEO There is still an opportunity for other strategic investors to get involved in the com- there is a current surplus of zinc metal, (CDPR), which in November 2019 an- TINKA RESOURCES pany’s success. From Tinka’s perspective, to get one or two additional companies the market has begun to understand nounced it would acquire Volcan Com- interested in the project is ideal for existing shareholders and my role as CEO is that the supply of zinc concentrate is pañia Minera’s Oxidos de Pasco asset to maximize this value and continue to attract new investors including other large not as robust as previously thought,” for US$30 million. Steven Zadka, CDPR’s corporates. observed Ricardo Porto, president and executive chairman, suggested that CEO of Nexa Resources Perú, who add- CDPR is treading on different territory To what extent has volatility in 2020 impacted Tinka Resources’ project time- ed that infrastructure-based stimulus to most juniors as it is acquiring a pro- line? packages to help revive economies will ducing company: “As we are going to The timeline for work at Ayawilca in 2020 has been impacted due to coronavirus, as push demand up and offset the reduc- be producing revenue, we now have the our drill programs were delayed during the lockdown in Peru. However, we recom- tion in demand from the automotive ability to tap into non-dilutive capital menced drilling at Ayawilca in October 2020. Tinka is actually in a very good place sector. sources such as streaming and debt,” as we are fully funded for the next two years and therefore do not need to raise ad- Peru’s biggest precious metals pro- he said, noting that there is also a lot of » ditional capital to complete our programs. We have 6,000 to 10,000 metres of high ducer, Buenaventura, became a stra- equity upside for investors considering priority drill metres to complete in 2020 and, as long as this program can be com- tegic investor in zinc-silver junior Tinka the 140 million mt of material inside the The net proceeds from the pleted this year, our time line remains on track. We expect to have an expanded Resources in January, which is in the rare mine in addition to exploration poten- investment with Buenaventura and improved zinc resource late 2020, and then be able to commence a PFS during position (for a junior in Peru) of having tial. “When an equity IRR is supplement- 2021-2022. As long as permitting can be completed on time, first production at the cash and permits in hand to prog- ed against a non-dilutive capital, you are and Sentient (C$18.5 million), Ayawilca could be in 2024. ress exploration work through to 2021, looking at a really high return on invest- which was closed in January according to CEO Graham Carman. “To- ment,” stated Zadka. 2020, will be used to advance Do you also have a final message for the audience of Global Business Re- day, in Peru, if you have a project with The city of Cerro de Pasco has had a con- permits in hand and you have strong fi- tentious relationship with mining, with the Ayawilca project through ports? Tinka Resources shares are attractively priced (TSXV:TK), considering we have in- nancial backing - you are in a premium the entire city polluted and the com- further exploration and vested ~C$30 million on the Ayawilca project in drilling over the last five years, position,” he said. munity living on a mine. Zadka revealed development over the next two while the company is well funded and now has Buenaventura as a strategic investor. In September 2020, the company an- that the ultimate goal is the relocation of to three years. Once zinc prices rebound, and leading up to that time, Tinka should be the go-to nounced preparations were underway the entire city to Ninacaca in Pasco. “We zinc project on the horizon for investors to consider. Today, in Peru, if you have a for a ~7,000 meter drill program consist- can offer the Peruvian government a way project with permits in hand and you have strong financial backing, you are in a ing of approximately 20 diamond drill to resolve a very bad situation they have premium position. The best way to create real shareholder value is by expanding holes, most of which lie adjacent to the on their hands. We are the only solution « our resources through exploration discovery, as well as advancing and de-risking Colquipucro Fault. It is anticipated that for Cerro de Pasco and our property and the project towards development, and this is Tinka Resources’ combined strategy the drill program will be completed in operations hold great potential for the moving forward. ■ early 2021, subject to potential delays region,” concluded Zadka. ■

PERU MINING 2020 52 Industry Explorations Global Business Reports 53 EDITORIAL Global Business Reports Industry Explorations EDITORIAL

Other factors contributing to the decline in Peruvian gold Being able to advance its Bolivian project caused Eloro’s different jurisdiction is an illustration that Peru cannot rest Precious production are the lack of junior projects to have gone into share price to appreciate over 300% in 2020, from under on its laurels; geological potential must be backed up by production in recent years, and a lack of well-funded, ad- C$0.30 in January to over C$1.30 in September. When ques- streamlined permitting. Metals vanced stage juniors to boost a development pipeline that tioned, Larsen reinforced Eloro’s commitment to Peru, re- Another precious metals junior to have experienced Peru’s is dominated by brownfield expansions from current produc- vealing that a new mining-friendly president and committee cumbersome permitting procedures is Pucara Gold (for- ers. “If you look at Peru, there are no new gold projects com- in Pallasca were elected in December 2019. Although Eloro’s merly Pucara Resources), the gold-focused company with a ing up, and at the global scale these projects are very scarce. intention to develop its Peruvian asset is encouraging, the portfolio of 10 projects across Peru. “There is interest from This scarcity, coupled with the uncertainty surrounding the positive market reaction it received acquiring a project in a investors to finance projects, but the system is failing the

world economy, will continue to push the gold price up- 54>> IN AN IDEAL MARKET FOR PRECIOUS wards,” commented Yuri Valdivieso, geologist for Palamina. While the market conditions are favorable for gold, Peru INTERVIEW METALS, PERU HAS A LACK OF needs to take advantage. However, there is a risk that juniors ADVANCED STAGE GOLD JUNIORS will migrate to more exploration-friendly jurisdictions. One of the issues since the decentralization process that trans- ferred more power to regional authorities in Peru is the risk David of individuals with an anti-mining stance opposing permits. Kuya’s website mentions the Bethania silver mine and al- This was the case for Eloro Resources, whose La Victoria ways been small, until now… Can you elaborate on this gold and silver asset is located in the San Markito area close Stein statement? Gold output fell for a fourth consecutive year in Peru, largely to the Pallasca community. Awaiting a maiden drilling cam- On a tonnage basis we are planning to expand production due to crackdowns on illegal mining operations in the La paign in 2018, the permission to attain surface rights was not by 3.5 times, and will be producing the concentrate on site, Pampa region and lower grades at existing projects. While granted by the Pallasca community president at the time, instead of toll milling like before. By doing so, we eliminate President Peru remained the sixth biggest producer of gold in the despite receiving the backing of the majority of the commu- the long haul trucking costs of the ore, and reduce the milling world in 2019 (143.3 tonnes, according to World Gold Coun- nity, according to CEO Tom Larsen. This led to Eloro stop- KUYA SILVER costs because we won’t have to pay other mills a premium to cil figures), it risks being overtaken by the rising star of West ping activities at La Victoria in December 2018 and turning use their facilities. We also expect to get better recoveries for Africa, Ghana, which produced 142.4 tonnes in 2019. its attention to the Iska Iska project in Bolivia. the metals by designing a process specifically for our ore. In addition to the expansion, we have the funds for a significant What were the circumstances surrounding the creation drill program, which will be important to future growth. of Kuya Silver and how you came to take control of the Bethania silver mine? What are the next steps for Kuya Silver and what does I was looking at a variety of projects for potential investment the future hold for the company? around 2016/17, and Bethania stood out as having the most In August we received approval for the EIA for the new plant outstanding potential. We created Kuya Silver in late 2017 to that we are looking to build at site. If the market remains acquire the Bethania mine. The short term goal is to expand strong we could be in the position to start construction early and restart the mine, which was put into care and mainte- next year and could have production by the end of 2021. We nance in 2016. We saw the opportunity to put our own plant are fortunate that the area we are in in Central Peru is used to at site, which will greatly lower the costs and increase produc- mining and the mine is near a small community that has had a tion, which makes it a very exciting silver project. positive experience with the mine. It is hard to get exposure to pure silver plays, as so much of I see Kuya in the longer term being a consolidator in silver- the metal is mined as a by-product, and even companies that focused projects. Building on the success of Bethania we will specialize in silver often have gold assets. This is why true pri- be looking to do further projects here, as Peru is stable, has mary silver companies trade at very nice premiums. huge exploration potential, and we are positive about the fu- ture of mining here. ■ What are the reasons behind taking the company public in October 2020? When I first struck the deal to acquire Bethania in 2017, we were in a bear market. We thought that staying private until production we could go public as a junior producer, some- thing like Excellon Resources, which would be much more at- tractive for our investors. We were able to raise US$4 million privately over several tranches over the past two-and-a-half- years, attracting Eric Sprott and a number of other mining- savvy investors. In early 2020, we started looking more ag- gressively at go-public options for the company and settled on a transaction with Miramont Resources that we announced in June. It has been a great fit. Once we announced our plans to go public, we were able to raise C$12 million in June and we went public in October 2020 on the Canadian Securities Exchange (CSE), under the ticker KUYA.

PERU MINING 2020 54 Industry Explorations Global Business Reports 55 PERU MINING 2020 EDITORIAL Global Business Reports Industry Explorations EDITORIAL

<<53 mining industry with regards to excessive regulations, such rated on how his company’s strategy evolved due to the im- Peru there is an allowance for radioac- age of 63,000 mt/y and a 33 year mine as the requirement of prior consultation for an exploration proving market conditions: “In early 2020 we started looking Lithium and tive mineral mining and processing. life,” he said, observing that 85,000 project which makes minimal environmental impact,” said more aggressively at go-public options for the company and What does not currently exist is the reg- mt/y would put Falchani as today’s sin- Steve Zuker, Pucara’s president and CEO. settled on a transaction with Miramont Resources that we Uranium ulation regarding the safe handling and gle largest lithium chemical project in However, better news came when Pucara finally went public announced in June.” transport of uranium from the site to the the world. “As an example, SQM pro- on October 6th, 2020, with its share price shooting up to Once Kuya announced it would go public, it subsequently port, and the port to the enrichment fa- duces 70,000 mt/y,” he added. C$1.50 on the same day it opened trading at C$0.40. Zuker raised C$12 million in June, before going public on the Ca- cilities. “Peru is a founding member of Before the Falchani lithium discovery affirmed that Pucara Gold will focus its efforts on advancing nadian Securities Exchange (CSE) in October 2020, trading the International Atomic Energy Agen- altered the company’s focus, Plateau exploration at its flagship Lourdes and Pacaska gold pro- over C$1.40 under ticker KUYA. Stein revealed that Kuya is On September 10th, 2020, Peruvian cy, and the Peru government is working Energy Metals (previously Plateau Ura- jects: “These are high sulfidation epithermal gold targets, planning to expand production by 3.5 times at Bethania, Congress received an initiative for the on regulations and targeting comple- nium) had worked on the consolidation exhibiting similar geologic characteristics to other large HS and will be producing the concentrate on site, instead of exploitation of lithium and its deriva- tion for the end of 2020. Lithium, on the of extensive uranium resources in the gold deposits like Yanacocha in northern Peru and Mulatos toll milling like before. “By doing so, we eliminate the long tives by the State from the deputy Jesús other hand, is a non-metallic mineral Macusani district in Puno, south-east- in Mexico.” haul trucking costs of the ore and reduce the milling costs Arapa of the Popular Action Party. If the and non-radioactive. It is already in the ern Peru. While the uranium industry because we won’t have to pay other mills a premium to use project is approved, the different phas- mining law and regulations are not re- had been in the doldrums since the their facilities,” he explained, adding that Kuya also expects es of the mining activity related to lithi- quired.” 2011 Fukushima disaster in Japan, the A new public silver company hopes to to get better recoveries for the metals by designing a pro- um will be declared of public necessity In February 2020, Plateau Energy Me- radioactive metal used in nuclear fuel is restart Bethania in 2021 cess specifically for the ore. and of national interest. The initiative tals announced a positive PEA for its another of the commodities to make a In August, Kuya received approval for the EIA for the new also includes the creation of the Nation- Falchani deposit in Puno. The PEA indi- remarkable comeback in 2020, with re- Kuya Silver acquired the past-producing Bethania silver mine plant that it plans to build at site, and has the funds for a sig- al Lithium Regulation Council, which will cates a scalable, long mine life battery- newed interest in the segment. Holmes in 2017, and has since received investment from the likes of nificant drill program to grow the resource, affirmed Stein. be in charge of regulating the activity. grade lithium chemical project which summarized uranium’s market dynam- Eric Sprott in an effort to get the mine up and running by “If the market remains strong we could be in the position to Alex Holmes, president and CEO of Pla- Benchmark Mineral Intelligence (BMI) ics: “The outlook for uranium has im- the end of 2021. David Stein, president of Kuya Silver, elabo- start construction early next year,” he remarked. ■ teau Energy Metals, was keen to elabo- rates in the low second quartile of op- proved significantly as a result of supply rate on the misconception surrounding erating costs. Holmes explained how a disruptions due to Covid-19. We believe such legislation: “I often read about phased expansion approach will give it has opened up weaknesses in the INTERVIEW uranium-lithium legislation, which is Falchani the scalability to be able to spot market and it is a matter of time funny because they are totally different adapt to the market: “Through three before utilities are forced to go back to metals/minerals,” he observed, explain- phases we ultimately ramp up to 85,000 the contract market to cover their fuel ing that in the general mining law in mt/y of lithium chemical, with an aver- needs for the next few years.” ■

What were factors behind Cerro De plored and we see a significant amount Steven Pasco Resources’ (CDPR) decision to of blue sky potential. There is also an acquire Volcan’s Oxidos de Pasco asset underground mine, which we will look to What were the highlights from the istry is evolving, the lithium chemicals in November 2019? reactivate in 2020. Alex PEA for the Falchani lithium project demanded also changes. Zadka CDPR will acquire all of the issued shares in February 2020? as well as permits, licenses and conces- How do you plan to increase process- Through three phases we will ramp up What do the existence of by-products sions of Volcan’s Oxidos de Pasco asset ing capacity at the plant? Holmes to 85,000 mt/y of a battery quality lithi- hosted at Falchani, such as potassium, for US$30 million. As we already had the The sulphide concentrators are running um chemical, with an average of 63,000 mean for the potential of the project? tailings and the stockpile at Cerro de at 7,000 mt/d, but are permitted for up mt/y and a 33-year mine life. That would As we leach the lithium out of the host Executive Chairman Pasco, we were looking to conglomerate to 19,300 mt/d. The plan is to bring the put Falchani as today’s single largest rock, potassium (also in the host rock) CERRO DE PASCO RESOURCES everything into one company. Originally production back to its permitted capac- lithium chemical project in the world. comes into our lithium sulphate solu- we were interested in the sulphide con- ity. CEO and Director tion, and we have the ability to precipi- centrators as they were not producing PLATEAU ENERGY METALS From a cost perspective, how does tate the potassium using conventional to their full capacity, but we realized that What is CDPR’s strategy for raising Falchani compare with other stand- technology into an SOP fertilizer. Do- the oxides were also related as they are capital? out lithium projects globally? mestic use is huge in Peru and there in the same area and use the same tail- CDPR is treading on different territory to Because Falchani is not a spodumene are currently no domestic sources in the ings dam. Therefore, we saw the oppor- most juniors as we are acquiring a pro- project, the way the lithium is hosted country. tunity to also include the oxides as part of ducing company and essentially we are allows us to rapidly extract it within 24 We have also identified cesium and ru- the acquisition. Volcan spent a significant becoming a producer. As we are going hours through a tank leaching process. bidium chemical production potential. amount to build the oxide plant and has to be producing revenue, we now have Downstream of this, the chemical crys- Cesium is on the US critical minerals identified a seven-year mine life that will the ability to tap into non-dilutive capi- tallizer component of the plant is iden- list, and China controls the only three generate approximately 200,000 ounces tal sources such as streaming and debt. tical to what Tianqi and Albemarle use sources. It is a high-value market with of gold and 18 million ounces of silver. If you look at the amount of resources in Australia as we bring lithium into sul- use in air-traffic monitoring, night vision We are fortunate to be acquiring in situ we have combined, there is still a lot of phate solution, approximately 24 hours applications, medical devices and lubri- resources – there is 140 million mt of ma- equity upside for someone to get in at later the plant precipitates a low impu- cants. None of these by-products were terial that is still in the mine, which is very this level. When an equity IRR is supple- rity, battery quality lithium chemical. included in the economics today, but high grade with good recoveries. In ad- mented against a non-dilutive capital, This is important because lithium into have the potential to reduce the net op- dition, the approximate 11,000 hectares you are looking at a really high return on sulphate solution gives us end-product erating costs of Falchani from its already of concessions have not been fully ex- investment. ■ flexibility, as lithium-ion battery chem- low 2nd quartile benchmark. ■

PERU MINING 2020 56 Industry Explorations Global Business Reports 57 PERU MINING 2020 GBR • Industry Explorations • PERU MINING 2020

ENGINEERING, CONSTRUCTION AND CONSULTANCIES

"Covid-19 is causing a significant and permanent impact on the mining industry. It is changing the way we operate and interact. It is changing current health and safety protocols in order to preserve social distancing, and it is changing the way we staff operations. This said, it is also presenting opportunities to introduce change at a faster pace as it has brought down paradigms such as remote work and use of technology."

- Gianflavio Carozzi, CEO, AESA

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Engineering, Growth through Construction & » consolidation and Consultancies innovation Mining companies have accelerated their digital transformation initiatives… Our team was able to adapt and work remotely by using digital real-time Consolidation has not been confined to mining companies in Innovation has also been a growth driver for Wood, since tools to work online, including tools for augmented recent years, as some of the largest EPCM and consulting hous- the US$2.2 billion merger of Wood Group and Amec Foster es ramped up M&A activities to bolster their service offerings Wheeler, according to former operations manager for mining ADJUSTING TO THE reality, connecting our subject matter experts with clients increasingly looking for a one-stop-shop instead of and minerals at Wood’s Peruvian office, Franco Pedraz. “We NEW NORMAL abroad with our local teams and clients. outsourcing to multiple suppliers – a trend that should be ac- believe that if a company and its operations are digitized the celerated in a post-pandemic landscape as mining companies initial capex investment will decrease the opex significantly. look to reduce the number of service providers in and around I think as soon as people have enough examples of projects their sites. where technology impacted the opex savings, they will place a In April 2019, Australian EPCM giant WorleyParsons an- bigger emphasis on the implementation of innovation.” Franco Mining industry headlines in 2020 have focused on the impact - Alfredo Remy, nounced the completion of the US$3.2 billion acquisition of Pedraz is now country manager for Worley’s Peru office. Covid-19 has had on production levels, commodity prices and General Manager, Jacobs’ ECR (Energy, Chemicals and Resources) division, re- Patrick Smith, managing director and CEO of AMC Consultants, volatile share performance. Perhaps the most profound im- Hatch Peru branding to “Worley” in the wake of the transaction. On the commented that the ability to start a mine with new innovations pact, however, has been on those at the front line and behind consulting side, ERM (Environmental Resources Management) is more feasible for those with bigger budgets and large-scale, the scenes at the operations: engineers, construction workers, acquired CSA Global in July, a coming together of mining and long-life mines, such as open-pit iron ore operations, for exam- contractors and consultants – those who design, build and run environmental expertise – another of the prevalent themes in ple. “However, it is more common for companies to evaluate the mines. With infection rates still high in Peru, industry work- recent years – as environmental social governance (ESG) has their projects on the basis of tried and tested technologies and ers have had to adjust to the “new normal”. “It is changing the « moved quickly to the forefront of strategy for mining compa- then, after they have built the mine, implement extra technolo- way we operate and interact; it is changing current health and nies. In February 2020, ERM acquired Critical Resource Strat- gies to improve the operation,” he explained. ■ safety protocols in order to preserve social distancing, and it While a certain amount of engineering and consultation can egy & Analysis – a specialist sustainability advisory company. is changing the way we staff operations,” observed Gianflavio be performed remotely, field work and environmental studies Canadian engineering and consultancy firm WSP was particu- Carozzi, general manager of mining contractor AESA. were two of the main areas restricted by the lockdown, accord- larly active in the M&A space in 2019, completing nine acquisi- The impact of the pandemic is also presenting opportunities to ing to Antonio Samaniego, director of SRK Consulting. Since tions to diversify its service portfolio. “You need to be ubiq- introduce change at a faster pace, he related, bringing down these restrictions have been lifted, where has demand been uitous, have a global footprint and a wide range of expertise paradigms such as remote work and use of technology in order coming from? “Now that mines have reopened, the demand is to follow the biggest clients,” explained Gonzalo Covarrubias, to cope with the crisis: “Changes that had been set aside or coming mainly from reserve verification and due diligence for general manager of WSP Peru, who underlined the importance rejected in the past will find significant tail wind to be revisited capital investments, so a lot of work on the economic aspect,” of having local knowledge but being able to call on specific and implemented.” related Samaniego, specifying that SRK has performed a lot global expertise. “In Peru we are running several projects Alfredo Remy, general manager of Hatch Peru, explained how of due diligence for the new S-K 1300 standard from the U.S.’ which have an active presence of our colleagues from the UK, his team leveraged technology to adapt to remote work with Securities and Exchange commission (SEC), that companies Canada, Australia, Colombia and Chile,” he said. clients: “We used digital real-time tools to work online, includ- trading in the American market will have to present in 2022. Covarrubias also emphasized the importance of the environ- ing tools for augmented reality, connecting our subject mat- For other consulting firms, particularly those that work in stra- mental segment to WSP’s long-term strategy, noting that ac- ter experts abroad, with our local team and our clients.” He tegic advisory, business has been stimulated by the pandemic. quisitions such as that of the US-based company Ecology and added that mining companies have accelerated their digital FTI Consulting, an independent global advisory firm dedicated Environment in December 2019 were evidence of the growing transformation initiatives, working on technological roadmaps to helping organizations manage change, mitigate risk and re- demand for environment services. “Environmental also brings to advance through the implementation process at mine sites. solve disputes, has been busy helping mining clients navigate to the table the social aspect, not just the permitting. It is more This sentiment was echoed by Florencio Castro, vice president the evolving set of challenges Covid-19 has presented, accord- holistic and comprehensive, addressing topics such as climate for Peru at multinational EPCM Ausenco: “We are experiencing ing to Michael Cullen, FTI’s managing director for forensic and change, sustainable economic development and community technology at a much faster rate than normal,” he said, com- litigation consulting. When asked about the advice FTI gives to engagement,” he said, listing multi-disciplinary services such menting that Ausenco has noticed clients have become more clients regarding their approach to stakeholder engagement as mine closure as a focus area where WSP’s broad offering can open to embrace new ideas since the start of the pandemic. in times of crisis, Cullen suggested to confront the facts and add value. “We see greater levels of experimentation and testing, which balance optimism with pragmatism. “I use the example of the One of the major international engineering firms to have has been an opportunity to think differently about our opera- Stockdale Paradox, a term coined by Stanford professor Jim strengthened through acquisitions in recent years is SNC-La- tions.” Collins in his book Good to Great,” said Cullen, continuing: valin, which, strengthened its consulting services in innovation Castro mentioned that Ausenco’s Peru team has adapted to “Collins references Admiral Jim Stockdale, the highest rank- and new technologies through the 2017 acquisition of WS At- remote work, including the continuation of work at Mina Justa, ing military officer held in Hōa Lò Prison (the infamous "Hanoi kins. In addition to its EPCM and consultancy services, SNC-La- currently at a critical part of its construction. “We expect to Hilton"), who relates that the optimistic captives were often the valin now offers laser scanning for brownfield projects, drones have the mechanical completion at Mina Justa by the begin- first to perish because of unrealistic expectations. Stockdale for surveillance and monitoring, 3D, 4D and up to 7D modeling ning of next year. This is proof that even under these difficult never gave up hope, but also realized he could be in there for for engineering designs, as well as the implementation of tech- circumstances projects can still be delivered successfully.” a long time, and prepared accordingly.” ■ nological road maps.

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How did the five acquisitions made has been a lack of trust in the promises by WSP in 2019 impact its business in being made by part of the new develop- Florencio Peru? ments. Society has lost faith in the estab- WSP has acquired nine companies in lishment, which has created a bridge for 2019. However, the Louis Berger acqui- more stakeholders to come to the table. Castro sition, that happened towards the end Consulting firms can help from a technical of 2018, was the one that impacted the approach and can help engage NGOs, company’s Peruvian business the most. which is something WSP has been doing Louis Berger had been active in the coun- in Latin America. This is linked with in- Vice President – Peru try for 24 years, and its portfolio of pro- novation – how can you bring value to a AUSENCO jects that includes infrastructure, and the project long than its life of mine? Mining design and supervision of airports and companies cannot afford to only be ex- ports, has really strengthened the diver- perts at their core business but must now sity of our business in Peru. consider the social aspect from the very The industry has been undergoing a wave beginning of a project. of consolidation through M&A, as you Gonzalo need to be ubiquitous, have a global Have you noticed an increase in the de- footprint and a wide range of expertise to mand for tailings services in the wake Which projects and services have been early on, in the planning and design holistic approach to tailings, and our tail- follow the biggest clients. For instance, in of incidents such as Brumadinho? driving business growth at Ausenco? phases, to find ways to develop projects ings experts evaluate both how to mini- Covarrubias Peru we are running several projects that Absolutely. We have noticed a rise in Ausenco sees the current market con- sustainably. Due to these complexities mize the risks associated with tailings, as have an active presence of our colleagues the demand for our tailing services in ditions for copper and other metals in- that are specific to Peru, it is crucial for well as the overall management during from the UK, Canada, Australia, Colombia recent years, with a more proactive ap- volved in the electrification of transport, engineering firms to have enough local its life cycle. and Chile. proach from mining companies to invest along with gold, as robust, and expect experience and knowledge. in technology and new ways that mitigate strong global interest in these metals to How do you see the health of the Pe- What type work has WSP been doing the environmental liabilities posed by tail- drive our business. We recently complet- What have you noted to be the main ruvian mining industry, and where do from its environmental and water seg- ings. We are just starting these services in ed Carrapateena – a copper-gold mine areas of focus for your clients? you situate it in the cycle? ments? Peru, but always in collaboration with our in South Australia, for OZ Minerals. The Restoring production under Covid-19 It is always difficult to know where metal General Manager – Peru The environmental segment is a key part experts abroad. An example of this is the project was ramped-up to nameplate has been a key priority and companies prices will be heading, never mind under WSP of WSP’s long-term strategy, and some of work WSP is doing with Glencore at Anta- capacity in under one month after com- are also reviewing their short-term capi- so much uncertainty. Prices have been the company’s recent investments have paccay, performing an EoR (Engineer of missioning completion and continues to tal expenditure plans in light of the new going up recently, and the expectation been directed here, such as the acquisi- Register) for the three tailing dams. Safety achieve excellent recoveries. cost variables introduced by Covid-19. I is that, as the economies recover from tion of the US-based company Ecology is in the core of the mining sector and ev- At Mina Justa we have provided a com- believe there has also been more open- Covid-19, demand will gradually pick up and Environment in December 2019. In ery incident is considered seriously. plete mine-to-port solution. This is a ness to the use of new technologies and and drive prices further. History shows Latin America, WSP is the number one flagship project for us, we are very proud novel approaches. We are experiencing that great crises have been followed by consulting firm in environmental services Can you elaborate on WSP’s “Future of the work done there despite a small the use technology at a much faster rate expansion periods in the mining indus- » and water, with over 1,000 employees Ready” slogan? stop due to Covid-19. We are now con- than before in the industry. In the past, try. We are optimistic there will be an up- dedicated to this. Environmental also “Future Ready” demands WSP to design tinuing the construction and we expect we noticed many mining clients were ward trend in demand for metals beyond brings to the table the social aspect, not today considering the problems of the to have the mechanical completion by reluctant to embrace new technologies, the current difficulties for which Peru is Part of WSP’s consulting service just the permitting. It is more holistic and future. In a 30-year project, what issues the beginning of next year. This is proof but under this situation we see greater well positioned to take advantage of. is focused on how to make a comprehensive, addressing topics such could be faced down the line, and how that even under these difficult circum- levels of experimentation and testing, long-term relationship between as climate change, sustainable economic can we address them now? Three of the stances, projects can still be delivered which has been an opportunity to think What differentiates Ausenco from its a project, the community and development and community engage- fundamental key trends to consider for successfully. differently about mining projects includ- competitors in the mining engineering ment. Part of WSP’s consulting service is this are climate change, society and tech- ing its construction and operation. services space? the operation. Tied to this focused on how to make a long-term re- nology. We believe this approach is what What are some of the engineering Ausenco has a great track record of is, for instance, mine closure, lationship between a project, the commu- differentiates WSP, and what helps us re- challenges specific to Peru when do- Could you elaborate on the expertise completing complex projects in Peru; which is a multidisciplinary nity and the operation. Tied to this is, for tain the best experts. In order to follow ing early-stage study work? that Ausenco holds in the areas of tail- Constancia and Mina Justa both exem- service in its essence that instance, mine closure, which is a multi- this approach, having global expertise is The recognition of local characteristics ings management? plify our project delivery capabilities. disciplinary service in its essence that important, but you also need to question is very important especially in the early Ausenco covers every aspect of a project The second differentiating point is that involves the environment, water involves the environment, water man- yourself. We analyze the development of phases of project development. Peru’s from pit to port, including tailings. It is we go across the full value chain in Peru, management, decommissioning, agement, decommissioning, community resources, economies and technology to altitude and the remoteness of it mine important to think of tailings in a differ- providing a complete range of services community management, and management, and general infrastructure. predict how things could be in the future. sites are well-known challenges, but ent way to minimize this long-term in- from permitting to engineering, cons- general infrastructure. It is important to have clients with a simi- equally challenging is that Peru requires dustry liability. More than looking at the truction, and sustaining capital. Thirdly, How could social tensions between the lar mindset and we have started to see very detailed planning for permitting existing technologies to reduce tailings Ausenco always looks at a mining project industry and regional communities be this from the biggest clients, as this is be- and particularly, for achieving social li- impacts per se, we also need to think differently, starting from the project bal- alleviated? ing driven by shareholders and consum- censes, and many projects failed in the of other ways to improve how minerals ance sheet and always looking for bet- « There is not a recipe for success for this, ers. In Peru this used to be a back-office past due to these aspects more than are processed, and ultimately reduce ter ways of designing a financially viable, but you have to have a deep understand- issue, but is moving to the front of corpo- technical or economic factors. These not only tailings volumes but also water technically sound and environmentally ing of what the communities want. There rate strategy. ■ considerations need to be incorporated and energy usage. Ausenco takes a very conscious mining project. ■

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Can you explain how BISA has evolved is still a significant amount of ignorance Local Players in since becoming independent from Bue- that leads to a lack of trust. naventura? The importance the government places on the Market » 2019 was BISA’s first complete year of in- the mining sector is also relevant. I believe dependence from Buenaventura. The com- that currently, their focus is not on promot- pany has had the same management team ing the industry, but rather on managing it. In the future, miners will need less people to be for the last four years, and generally we What drives the mining industry further is have been very happy with the develop- the capacity and willingness of the govern- monitoring the operation, but they will need more ment. In 2015, the company experienced ment to promote the sector and more ef- people to solve all the problems that big data an approximate US$3 million loss, so in fort is needed with this in mind. throws. 2016, we decided to reshape and refocus our efforts on our core business – engineer- Which area of Peru’s mining sector ing, consulting and construction manage- would you like to see improve in the ment, leading the company to break even coming years? 2019 was a successful year for Peru’s local engineering firms, - Renzo Ayala, in 2017. Revenues were then increased The government should work on creating as brownfields expansion projects for medium-sized -opera Geotechnical Manager, by 25% in 2018 and 21% 2019; EBITDA favorable conditions for exploration com- tions, rather than the big EPCM jobs suited to the international turned positive in 2018 and more than panies. New exploration and greenfield Anddes Federico heavyweights, offered opportunities for growth. This was the doubled in 2019. At the beginning of the projects will have to start soon as it can case for BISA Ingeniería de Proyectos, which enjoyed its first year, we aimed to see another 10% growth take a long time to move from exploration full year of independence from Buenaventura in 2019, and Schwalb in revenues in 2020; however, due to re- to development and production. Although has worked with Yanacocha, Antamina, Nexa Resources, Bue- strictions caused by the worldwide sanitary production is currently strong, ore grades naventura and Chinalco in recent years. Federico Schwalb, issues, we estimate similar results to those are declining and new projects need to be BISA’s CEO, explained that the company was restructured in « of 2019. developed as we can not rely on brown- 2016 to focus on its core business – engineering, consulting field projects forever – resources need to and construction management – leading BISA to break even in Of the services offered by BISA, Schwalb has seen a growing Where is most of this business demand be replaced and new projects to be devel- 2017, followed by revenue increases of 25% in 2018 and 21% demand for the PMO (Project Management Office) service, coming from? oped. in 2019. where a third party company can be the eyes and ears of an BISA’s niche is in brownfield projects, and General Manager – Peru operation, showing the mining company how to execute a by focusing on our core strengths we have Do you think the mining companies have project properly. “BISA has realized that a good way to take on BISA INGENIERÍA DE PROYECTOS been growing well in this market. In the more disciplined cost structures these projects is by integrating a PMO which can plan, execute and future, we would like to take part in green- days? control,” he said, adding: “We expect this area of business to field work, but after the two big projects After the mining boom in 2012, when the grow in 2020 and I think that we will become the PMO partner finish – Mina Justa and Quellaveco – there tide started to go down, it become evident for many more projects.” is a dearth of greenfield projects in Peru, that some mining operations where not Multidisciplinary engineering company Anddes is headquar- so in the short term, growing through our profitable. There was less investment en- tered in Lima and has further offices in Chile and Argentina. niche is the best strategy. BISA’s key clients tering the industry and many mining opera- Renzo Ayala, Anddes’ geotechnical manager, expanded on » in the mining sector include Buenaventura, tions had to focus on cutting costs. Besides the company’s research department created in 2013: “During Yanacocha, Antamina, Nexa Resources, prices now starting to increase again, we these years, most of our research projects have been financed and Chinalco. can see that there is more discipline and by Peruvian government funding,” he said, continuing: “We BISA has realized that a good As well as working directly with mining control over costs in the mining industry. are very oriented to mining trends such as risk management way to take on projects is by companies, BISA also has formal collabo- Having discipline and control allows for mi- and security, which have become especially important due to rations with other engineering companies ning companies to develop strong projects integrating a PMO (Project a large number of failures that have occurred in mines world- in Peru to collaborate on projects. As the that would survive a downturn in the mi- wide.” Management Office) that can company tries to expand geographically, ning cycle, and in that sense, Peru’s mining Ayala also spoke on the role of technology in automated plan, execute and control. BISA is we would like to increase our presence in industry is in a better position than it used monitoring, analyzing results and ensuring decision making currently the PMO for two very other countries through partnerships. to be. becomes easier, and how this will impact the local workforce: important clients – we help them “In the future, miners will need less people to be monitoring What would you say are currently the Can you elaborate on BISA’s service as a the operation, but they will need more people to solve all the manage, are their eyes and ears, biggest challenges facing the Peruvian PMO (Project Management Office)? problems that big data throws.” He gave the example of an and show them how to execute mining industry? BISA has realized that a good way to take application Anddes introduced that automates seismic record- projects successfully. Attaining community acceptance is still a on projects is by integrating a PMO (Project ings in a few minutes to alert mining companies when an earth- big challenge in the Peruvian mining in- Management Office) that can plan, execute quake occurs. dustry. Creating the appropriate climate to and control. BISA is currently the PMO for Anddes has adopted standards set by the International Council successfully develop operations requires two very important clients – we help them of Metals and Mining (ICMM) that make mining processes and collaboration from all stakeholders from manage, are their eyes and ears, and show the design of mining more rigorous, in line with the company’s the earliest stages of a project. As an indus- them how to execute projects successfully. policy of replicating the ideas and guidelines that have been « try we have to work on better communicat- We expect this area of business to grow implemented in other mining countries to strive for constant ing the work that we do and the benefits in 2020 and think that we will become the improvement. ■ this work holds for the entire country. There PMO partner for many more projects. ■

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CONSULTANTS HAVE THEIR SAY duction. This way they could benefit from the current cycle, be- Antonio cause any new projects will require lengthy permitting and they will not be in production during this cycle.

Samaniego How are industry standards evolving with regards to tail- ings management? You need to confront the facts and balance optimism with pragmatism when All associations and professional bodies are releasing their tail- engaging stakeholders. I use the example of the Stockdale Paradox, a term coined ings management reviews and guidelines, such as the ICMM. by Stanford professor Jim Collins in his book Good to Great. Collins references As former president of the Peruvian Institute on Mining Engi- Admiral Jim Stockdale, the highest ranking military officer held in Hỏa Lò Prison (the neers (IIMP), I have been participating in the Global Mining infamous “Hanoi Hilton”), who relates that the optimistic captives were often the Professionals Association (GMPA), a group including SME, CIM, AusIMM, SAIMM, IOM3, IIMCh and IIMP, which are the leading first to perish because of unrealistic expectations. Stockdale never gave up hope, Director mining professional institutions worldwide that got together to SRK CONSULTING but also realized he could be in there for a long time, and prepared accordingly. improve visibility of the mining industry.

- Michael Cullen, Managing Director – Forensic & Litigation Consulting, How is the future shaping up for SRK in Peru and globally? FTI Consulting In Peru, we have a team of more than 100 professionals, and our main objective is to maintain the team during these chal- lenging times, while we also prepare the next generation of company leaders. Globally, SRK employs 1,400 people and we What have been the main areas of work for SRK in Peru are trying to work as “one SRK”, to identify the best people for It is not about giving your workforce a handbook of rules, and then following them during the pandemic? each area of practice and better serve our clients. around to ensure they comply, but instead, creating a culture where the workers The main effect of the pandemic has been the restrictions on Finally, we are working a lot on innovation. Our Vancouver and themselves are involved in the safety program through workshops, inspections, and field work. We were only able to go back to the mines and pro- South Africa offices, for instance, are developing rock mapping jects in late June, and in a very limited way. We have all been methods using satellite images and photographs, which is very safety activities so that they have a sense of accountability and ownership in the working from home for the most part. We have had to work valuable today, as we are unable to send geologists on site. ■ company’s safety performance. a lot with information provided directly by mining companies with our remote guidance. Besides this, there has been a lot of - Steven Botts, President, optimization work to reduce costs. Santa Barbara Consultants Now that mines have reopened, demand is coming mainly from mineral resource and reserve verification and due diligence for capital investments. We have requests of due diligence for the new S-K 1300 standard from the US Securities and Exchange Commission (SEC) for the few companies trading in the Ameri- Cradle to cradle I believe that opposition to the mining sector is not solely driven by concern for the can market that will have to present these reports in 2022. We environment, but also for political reasons. There is strong evidence that community did a very thorough SEC-compliant report for Nexa Resource, groups are manipulated by politicians and other groups with political agendas. By for instance. We have also done NI 43-101 PEA reports for Ca- managing an effective communication process and highlighting the benefits the nadian-based juniors that work in Peru, as well as due diligence independent reports for banks and M&A for credit institutions. industry holds for the country, the industry can show the government and other stakeholders how mining can create positive social and economic contributions. Could you provide examples of some of the interesting projects you have been working on? - Marcial García, Partner and Mining Lead, An important project has been an evaluation of all reserves and EY Peru resources for Buenaventura’s mines, which required sharp anal- ysis to define the cutoff grades because of the high volatility xploration, feasibility, due diligence, engineering of metal prices. We also undertook mining optimization work and operations through to mine closure. for Hochschild and have worked on an ore sorting project with Our global experience gives you expert, them. Overall, the crisis has put many new projects on hold integrated solutions on every phase of your Every organization has challenges, and often these are broader than the initial and most projects are related to operational optimization and mining project. problem may seem. Sometimes clients approach a consultancy looking for a expansions of tailings dams for current operations. Same team — start to nish. particular service, but our goal is to identify more broadly what needs to be done What advice would you give to mine operators to make the to get the very best result from the evaluation of the deposit, all the way up to the most of the current high prices? Peruvian mines use quite a lot of technology, but sometimes processing and recovery of the metal. they could benefit from an additional step toward automation >1,400 professionals • > 45 of ces • > 20 countries • 6 continents

and machine learning with the use of big data. There is a lot www.latam.srk.com - Patrick Smith, Managing Director and CEO, of information that could be used, and with this crisis there are T: +511 206 5900 E: [email protected] AMC Consultants personnel available to work on data analysis that could identify high potential areas within the operations for additional pro-

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When do you expect to see more mines moving underground in Peru? Paul Peru will move in the same direction Chile has, where we are seeing that for the Environment & older pits, an open cut / underground trade off study clearly shows that it is more favorable to extract the material under the pit via an underground mining method Tailings Management Murphy (often a caving method) rather than continue mining via an open cut method. Peru is at a stage where there are mature open cut mines, and we will see mines such as Antamina going underground in the future. There are also of course those projects that are underground projects form the beginning with no open cut component THE BRUMADINHO TRAGEDY HAS BEEN A Manager – South America at all. The region is full of them, be they narrow vein mines or large porphyries. MINING PLUS CATALYST FOR CHANGE How is the size and design of an underground mine established? A critical step in any mining study is “right sizing” the mine. With respect to how “big” a mine will be, that is derived from the optimization process, which deter- mines how much mineralized material can be extracted at a profit. On January 25th, 2019, three years on they can get by without paying proper collaboratively to drive the change that With respect to the rate at which the mine will produce, you first need to under- from the Mariana tragedy in Brazil, di- attention to the standard.” is needed.” stand what the deposit naturally wants to do, which will then drive the size of the saster struck again, as the tailings dam This sentiment was echoed by Adam The industry response to Brumadinho, infrastructure such as the processing plant. Grade of course plays a part (high at Vale’s Brumadinho mine in Minas Matthews, investment team director for including the Global Tailings Standard, grade mines can be small and still be profitable where as a low grade mind gen- Gerais burst, killing 293 people and the Church of England Pensions Board, will hopefully prevent such tragic events erally need the economy of scale to keep the costs low). With a block cave, for causing extensive environmental dam- and co-chair of the Investor Mining and in the future. However, it is important example, it is the horizontal surface area of the cave that dictates how much the age in the region. At Exposibram in Belo Tailings Safety Initiative: “We intend to to examine how a catastrophe on this mine can deliver; with a smaller scale stoping mine it will be how many operational Horizonte, August 2019, photos of all make a clear requirement to companies scale, at a facility owned by one of the areas you can have running at the same time and how much each can produce. ■ 293 victims were placed around Vale’s that, if they wish to retain continued five biggest mining companies in the stand in the exhibition hall. Before the investment and support of banking fa- world, could happen again after a similar first presentation at the tailings manage- cilities and insurance, they must show failure in 2015. Furthermore, as industry- ment round table, the lawyer represent- compliance… There is an inevitability wide compliance will not happen over- ing the victims and their families de- here, but also an opportunity to work night, could this happen again? scribed in detail how the chemical waste that had descended upon the town had killed them. If ever the industry needed How are Stantec’s business units divided in Peru, and which have been driv- to be shocked into action, it was at this Alberto ing growth? moment. In Peru, Stantec offers services in six different service areas. We have environmen- Indeed, Brumadinho was the catalyst to tal, which is primarily permitting and community services for mining operations, accelerate change, as a multi-stakehold- Coya two business units dedicated to water: the water resources business unit covers er review involving industry, investors water management for the entire water cycle of a mine and the water business unit and authorities led to the Global Indus- encompasses water treatment services for both mining and non-mining clients. try Standard on Tailings being launched Our tailings and waste unit provides all phases of design and implementation for in August 2020. Industry was represent- tailings storage facilities. The Construction Quality Assurance (CQA) is a service ed by the International Council on Mi- General Manager – Peru we offer for the infrastructure that we design. We also have an underground mi- ning and Metals (ICMM), investors were Regional Manager – LatAm ning business unit, established three years ago. represented by the Church of England STANTEC In 2019, Stantec had very positive business results in all six areas. Our projects Pensions Fund and Swedish Council on come from Stantec’s key clients, including companies like Cerro Verde and Cerro Ethics, who teamed up with the Prin- Corona where we have been working for many years. We also work for other large ciples for Responsible Investment (a mining companies in Peru, including Antamina, Las Bambas, Yanacocha, Bue- UN-supported international network of naventura and Hochschild. investors managing more than US$100 trillion in assets), and finally the Unit- How can Peru’s mining industry stimulate its exploration industry and get ed Nations Environment Programme projects developed? (UNEP) represented countries. Social issues are the biggest challenge for the Peruvian mining industry, however, “Comprising six topic areas, 15 princi- there are options for mining companies to overcome this challenge. One option is ples and 77 auditable requirements, the to invest in creating mining corridors where the government and the community Standard will ultimately be supported can jointly work out social issues up front. Having the State take the role of promot- by implementation protocols that will ing mining in certain areas would smooth the way for a good working relationship provide detailed guidance for certifica- between communities and mining companies. This approach could also assist in tion or assurance as applicable, and for establishing shared infrastructure needed for mines in the vicinity of the corridor. equivalence with other standards,” ex- In terms of greenfield projects, the Peruvian mining industry is still benefitting plained Tom Butler, CEO of the ICMM. from two projects that are under construction, but when these projects go into Butler went on to warn: “The writing is production in 2020-2021, there will be no new greenfield projects in Peru. ■ on the wall for anyone who thinks that

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How did the COVID-19 pandemic af- technologies may be applied in new pro- fect Amphos21’s operations? jects, but there are also a lot of conven- The pandemic impacted those projects tional mines out there where we need to where we had people at the operations, understand the risks and long-term condi- which had to stop between March and tions. Standards are definitely improving May. We are a highly diversified company, with more automatization, control and and while we had a certain reduction of ac- monitoring, so this is a segment where we tivity, we have recovered quite rapidly and are going to see a lot of work in the future. we expect to have reasonable results this year, considering that 2019 was a record What differences do you see between year for Amphos21 globally. The market the countries where Amphos21 oper- has recovered, also driven by good metal ates? prices. All the countries where we work present a In general terms, Covid-19 is going to ac- very strict regulatory framework. In Spain, celerate the process of digital transforma- and generally in Europe, mining used to tion. We need to see how new technolo- be a strong industry, but this is no longer Eduardo gies like the internet of things, machine the case, so our services there usually fo- learning and artificial intelligence can be cus on expert advisory and R&D activities. linked to the day-by-day tools and instru- Latin-America, and particularly Chile and Ruiz ments used in water management. Achiev- Peru, are the strongest mining countries ing this will require strong capital invest- for us, where mining has an enormous ment by miners, but at the end of the day weight in the economy and strong support it will allow for more efficient and safer from the government. They both have Image courtesy of Gold Fields operations. Only the bigger miners will be similar environmental frameworks where A lack of high-level expertise could phos21, emphasized the relevance of environmental and human liabilities sur- able to invest heavily on this in the near- water is always controversial but present be one factor contributing to the risk. tailings facilities in the overall site-wide rounding the subject, mining companies term – it will take longer for medium-sized a different context. Major projects where “There are a huge number of tailings water balance of a mine, due to water be- are looking for the best expertise on the mines. we are involved in Chile are placed in General Manager dams in the world. Klohn Crippen Berg- ing a destabilizing element. “The trend market. Alberto Coya, Stantec’s general arid conditions where water resources are er (KCB) has nearly 600 employees who is to design and operate facilities that manager for Peru and regional manager AMPHOS21 Could you describe some of the pro- scarce, while Peru is a bit more diverse. If are constantly fully booked on tailings have a lower amount of water,” he said, for LatAm, underlined his company’s jects you are working on? water is scarce, as in the south of Peru, it projects and we probably serve only noting that while new technologies are reputation in tailings built through its We cover the full water cycle, including may be difficult to fulfil operational water 5% of the market,” related Dan Ether- being applied in new projects, there are global network of expertise: “Currently engineering and implementation of our demands and to obtain water rights, and edge, KCB’s general manager for South also a lot of older, conventional mines mining companies are demanding ‘grey solutions, and we apply all that at the early you may need to look to groundwater - if America. where the risks and long-term condi- hair,’ by this I mean they are putting a stages of engineering, during operations it is possible - or non-conventional resour- KCB had its best year ever in 2019, with tions need to be better understood. premium on individuals with many years » and when we do process optimization or in ces such as desalination and wastewater the majority of the demand stemming “Standards are definitely improving with of experience,” observed Coya, elabo- the valorization of environmental liabilities treatment. If there is too much water, like from tailings and water management more automatization, control and moni- rating: “Given recent failures, the indus- and closure activities. A challenging proj- in central Peru, you need to manage that services, according to Etheredge, who toring, so this is a segment where we are try demands more hands and eyes than ect we are working on is the reprocessing water surplus, which is particularly com- commented that, while the industry on going to see a lot of work in the future.” ever to look after tailings structures.” The relevance of tailings of tailings in Minsur’s B2 project. This is plex for underground mining operations. the whole has become more diligent As a diversified mining country with long The importance of being able to draw facilities in the overall a very interesting case from the point of And of course, both countries will have to with regard to tailings management, mining heritage, Peru has developed a upon global expertise to provide tai- view of waste management and the circu- pay close attention in the coming years to sitewide water balance is there are still cases of neglect. Citing lot of tailings experience. Antonio Sa- lored tailings solutions was also high- lar economy. We are also doing several re- climate change and the impacts on opera- the case of an unnamed client where a maniego, director of SRK Consulting lighted by Everaldo Abegg, country crucial and it is well-known search projects for Buenaventura Group’s tions. dam safety review was performed and and former president of IIMP, described manager – separation for Andritz Peru, that water is a destabilizing focus on mine closure for different compo- a liquefaction assessment was recom- the progress made on the topic of tail- who mentioned that dams are still the element for this, so the trend nents. Support on mine dewatering for An- What are your goals for the medium mended, Etheredge related how the ings management in Peru, including his dominant medium but there is a lot of in- tamina is another example of essential op- is to design and operate term? client’s local consultant advised against work with the Global Mining Profes- terest in dry discharge. “Companies are erational activities where we are involved. Amphos21 has always been a very innova- the investment. “There is a lack of knowl- sionals Association (GMPA), a group conscious of the issue of becoming de- facilities that have a lower tive company, so we want to be pioneers edge and comprehension about tailings including ICM, SME, IIMP, and other in- pendent or liable to a tailings pond and amount of water. To what extent is water management of new technologies and make sure that management and, even after the world stitutions worldwide. “Last year we had they are seeking preventive technolo- at the core of mining operations, espe- our team exploits its full potential. We has seen many disasters, there are still a meeting in Arequipa where we cre- gies,” said Abegg, noting that most new cially when it comes to tailings manage- have experts across the whole water cycle, some companies trying to cut corners,” ated the Global Action on Tailings (GAT) projects are mindful of how to incor- ment? and what we need to do now is to adapt he reflected, adding: “We have also re- working group. We have meetings every porate technologies to insure safe dry The relevance of tailings facilities in the new technologies and process the vast cently seen a tailings facility under cons- three months and we are working on stacking, increased product recovery overall site-wide water balance is crucial amount of data generated by the opera- truction with no technical specifications several initiatives related to this field,” and lower environmental risks. “Tailings and it is well-known that water is a desta- tions to improve our solutions and make or detailed design. The dam was being he added. de-watering is, without a doubt, becom- « bilizing element for this, so the trend is our work more efficient. For this, we have built from feasibility level drawings.” Considering the complexity and the ing the preferred management strategy to design and operate facilities that have a strong R&D arm that works together with Eduardo Ruiz, general manager of Am- variety of tailings dams, as well as the for discharges,” he added. ■ a lower amount of water. Of course, new academia and technical centers. ■

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Is the lack of high-level expertise Does Klohn Crippen Berger get in- One of the major mining contractors in the Americas, STRA- Dan about tailings a reason why there have volved in early stage work? Construction, CON, has seen a lot of business in the last couple of years been so many major tailings disasters Klohn Crippen Berger is involved in pro- from construction services, including the expansion of mine in the last five years? jects in the early stages and assists cli- Installation infrastructure, tailings dams and leach pads, according to Etheredge Not necessarily. There are a huge num- ents in site selection studies for tailings CEO Steve Dixon. Dixon gave the examples of Quellaveco, ber of tailings dams in the world. Klohn facilities. For example, the company and General for which STRACON did the earthworks for the plant site at Crippen Berger has nearly 600 employ- was involved in identifying the original the project, and is now working with Anglo American to pre- ees who are constantly fully booked on tailings location for the Antamina mine Contractors pare the mine for operation; and the Cobre Panama project, General Manager – South America tailings projects and we probably serve in Peru in the 1990’s. In collaboration which has now been commissioned and moved into produc- KLOHN CRIPPEN BERGER only 5% of the market. with the client, a decision matrix will be tion, where STRACON provided a broad spread of construc- We are currently dealing with a situa- developed to establish what is impor- tion services. tion with an unnamed client where we tant for the client and what will then be INFRASTRUCTURE-BASED STIMULUS Dixon revealed that STRACON felt a significant impact from did the dam safety review and recom- the best decision moving forward. when the state of emergency was declared in mid-March, mended a liquefaction assessment. PACKAGES AND HIGH METALS PRICES through until late May. “Throughout this period, our operat- The client’s local consultant advised Are companies changing their ap- POINT TO A BETTER 2021 ing rate was reduced to around 20% of pre-Covid levels,” the client that the liquefaction assess- proach towards tailings? said Dixon, revealing that STRACON had increased to 75% ment was not necessary, and they de- Dry stack tailings are becoming more capacity by September. “We had to work closely with clients cided against the investment. There is a prominent. Klohn Crippen Berger is to put into place appropriate protocols, first and foremost to lack of knowledge and comprehension currently developing dry stack tailings protect employees as we move forward.” about tailings management and, even designs for several clients and we have Pevoex has been working for Nexa Resources, providing a after the world has seen many disasters, done dry stack pilot studies for Vale in Construction sites and assembly works were some of the first full mining service at Atacocha, and working on the tailings there are still some companies trying to Brazil. The use of new and innovative to shut down after lockdown was announced by President dam at Cerro Lindo. Furthermore, the company provided cut corners. We have also recently seen tailings technologies is becoming more Vizcarra on March 16th, impacting construction projects such services at La Arena (Pan American Silver), performed pre- a tailings facility under construction common, but it is still quite expensive as the 15,000-person workforce sent home from Quellaveco. strip drilling at Cuajone, and worked as a subcontractor for with no technical specifications or de- and many companies prefer traditional As quarantine restrictions have loosened and projects have other companies in the construction of the tailings dam at tailed design. The dam was being built methods. ■ started to ramp up, the sector is recovering, but new health Quellaveco. ■ from feasibility level drawings. and safety regulations make pre-Covid levels of capacity un- likely in the near-term. One of the largest South American construction firms, Ing- eniería y Construcción Sigdo Koppers (ICSK), has managed to maintain the 28 projects it has in execution, according to CEO, Sandro Tavonatti: “The sanitary measures in place have What led to the creation of the Inves- How much have you seen investor’s forced the different parts of the value chain to work together Adam tor Mining & Tailings Safety Initiative? attitudes change towards environ- in unison, rather than as separate entities,” he explained, A few years ago, we developed our mental standards in the mining indus- adding that because ICSK works in various countries, it has ethical policy for investing in the mi- try in recent years? received daily feedback regarding the best sanitary practices Matthews ning sector to identify how we can re- Investors do not invest in a vacuum. As- from different jurisdictions, allowing the company to adopt sponsibly engage and invest. One of set owners and pensions funds invest international best standards quickly and mitigate risk. Investment Team Director the issues highlighted was an ongoing on behalf of a large part of society. In Peru, ICSK has been working on projects that include To- CHURCH OF ENGLAND concern around tailings dams, prior to Regulators now have very clear expec- romocho for Chinalco, and the sulfides area at Mina Justa PENSIONS BOARD Brumadinho but following the Mariana tations on how pension funds operate for Marcobre. Tavonatti confirmed that rising metals prices Co-Chair disaster, where we felt that the compa- on issues like ESG, and we have to ac- in Q3 have certainly increased the appetite for project de- INVESTOR MINING & TAILINGS nies (BHP and Vale) had been engaged tively demonstrate to our beneficiaries velopment, but warned against companies rushing into cons- SAFETY INITIATIVE by investors, but the sector-wide issue how we understand these financial risks truction without the requisite preparations. “Our experience still remained. A sector-wide approach and the action we take. This influences has taught us that it is wise to thoroughly plan all aspects was needed, and we started to put that the companies we invest in, and it is a of a construction project, in terms of cost, optimization, in- in place. Then Brumadinho happened. trend that is growing rapidly in one di- corporation of technology, engineering and due diligence,” This was the moment we felt we sim- rection. he said, noting that metals prices are cyclical and have many ply had to mobilize other investors that The recent outcry over what hap- variabilities, but correct construction planning can help guar- share the same concern, and that in- pened in Australia at the Juukan caves antee success in the short, medium and long term. vestors had to take a very different ap- with Rio Tinto raises a broad concern Larger companies that offer a multitude of integrated servic- proach. These disasters were clearly not about whether standards are being re- es stand to benefit from the post-lockdown landscape, with black swan events, but a recurring set spected, and that investors have really mining producers looking to reduce the number of different of disasters, and there was a disconnect understood what they are being told. service providers at sites. “I think we will see a consolidation between the continued growth in waste It underlines the importance of inves- period whereby mining operators will try to work with less and the way it was being managed and tors being at the table and driving best contractors,” reflected Víctor Gobitz, president of the Peru- the risk, both ethical and financial that practice. ■ vian Institute of Mining Engineers (IIMP) and newly appointed investors faced. CEO of Antamina.

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Which of STRACON’s services have attention to tailings management? Sandro Steve been in high demand in the last two There is definitely a heightened focus years? within the industry regarding tailings STRACON’s services have been fo- management. STRACON is a tailings Tavonat ti Dixon cused on the construction side, includ- dam builder: we have built several fa- ing the expansion of mine infrastruc- cilities, having had an involvement with ture, tailings dams and leach pads. the majority of large-scale tailings dam There has been a lack of new greenfield projects in Peru during the past 10 CEO CEO projects kicking off in 2019 and 2020, years. Additionally, we recently com- STRACON but since 2018 we have been work- pleted the construction of the tailings INGENIERÍA Y CONSTRUCCIÓN ing on Quellaveco. STRACON did the management facility for Cobre Panama. SIGDO KOPPERS earthworks for the plant site at the proj- It is important that no corners are cut ect, and we are now working with An- when undertaking the preparatory in- glo American to prepare the mine for vestigation work and initial engineering operation. work, then coming up with an appropri- Dumas, STRACON’s underground mi- ate design that addresses the criteria How has Ingeniería y Construcción been working on the Valdivia cellulose stant search for new collaborators, in- ning services provider based out of of each specific facility. Each project Sigdo Koppers (ICSK) dealt with the plant for Arauco, which has been tech- cluding technology providers and niche Canada, now represents around 25% is different, with its own geotechnical challenge of Covid-19? nically demanding and requires many engineering firms. Within the Sigdo Kop- of our overall business. We have also and hydrologic conditions, and access Covid-19 has been a test of ICSK’s ca- workers. By August, we had already re- pers’ group, a company called Godelius continued to provide a broad spread to suitable materials available for cons- pacity to adapt, to be more agile and turned to pre-Covid levels of capacity at supports and implements technological of construction services on the Cobre truction. All these factors along with forge closer relationships with our cli- these projects. developments in the mining and natural Panama project, which has now been several others must be taken into con- ents and collaborators. The sanitary resources market, offering solutions for commissioned and is producing. We sideration when developing the design. measures in place have forced the dif- What would you say to mining com- mine safety, monitoring centers (NOC), are looking to build upon this capability The construction must follow design ferent parts of the value chain to work panies looking to take advantage of content distribution, IP productivity, IT in Peru in the coming years. and be controlled with strict quality together in unison, rather than as sep- rising metals prices by fast-tracking infrastructure and IT/industrial conver- control process. Maintenance of these arate entities. Some contracts were construction? gence. After the Brumadinho tragedy, have facilities during their life is also a critical impacted, but the main investments Rising metals prices have certainly in- The construction industry is behind you noticed the industry paying more factor. ■ have been maintained. Today, we have creased the appetite for project devel- other sectors from an innovation stand- 28 projects in execution, and we have opment. However, our experience has point and needs to reduce the techno- worked hard to maintain these contracts taught us that it is wise to thoroughly logy gap that exists. ICSK wants to push for the benefit of our workers and their plan all aspects of a construction proj- these boundaries and not just accept What are the main projects Pevoex is not speak up about the importance of families, which equal thousands of peo- ect, in terms of cost, optimization, in- that, because things have been done a Rómulo involved in? mining is putting off investors. Today, ple. Because Sigdo Koppers works in corporation of technology, engineering certain way for many years, they should We currently have a three-year contract there is US$3.5 billion worth of invest- various countries, we have received dai- and due diligence. This is key to the suc- continue in that manner. to provide the full mining service at the ment that could be unlocked, including ly feedback regarding the best sanitary cess of a project and any company try- Mucho Atacocha mine. We have a very good Tía María, Corani, Coroccohuayco and practices from different jurisdictions, ing to rush this process could encounter As governments look to revive eco- relationship with Nexa Resources, and San Gabriel, if the government had the and this constant sharing of knowledge problems. Metals prices are cyclical and nomies with infrastructure-based we are also doing another job at Cerro political will to do so. But Tía María is has allowed us to adopt international have much variability, but correct cons- stimulus packages, what role can the Lindo’s tailings dam. We are also work- still stuck, and without Tía María per- best standards. truction planning can help guarantee construction industry play in generat- ing at La Arena (Pan American Silver), haps we will never have Zafranal moving success in the short, medium and long ing wealth and employment? and we are also doing pre-split drilling into construction either. The govern- General Manager Can you give examples of some of the term. Today, ICSK likes to offer a com- The key point is that construction and at Cuajone. At Quellaveco. Our main ment has also postponed the prior con- standout mining projects ICSK has plete package of engineering, construc- assembly companies work directly with PEVOEX goal is to continue consolidating the sultation process at San Gabriel to next worked on in recent years? tion and assembly, and work together local communities. Our industry has an company’s growth. This year we are year. To put it simply, the country can- In Peru, we have worked on the Toro- with clients from an early stage of their intensive use of resources, and because lining up US$4 million to invest in new not afford for these delays to continue. mocho project for Chinalco, a client that projects through to the end to ensure a of the scale of projects companies like equipment, including two or three large Other promising projects are Yanaco- ICSK has been working with for almost seamless project development process. ICSK work on, we bring a level of train- drill rigs to increase our pre-spliting cha sulphides (US$2.1 billion), Pampa 20 years. The other standout project in ing and expertise that helps elevate work, an area where we are bidding for de Pongo (US$2.2 billion) and Río Blan- Peru has been the sulfides area at Mina How is ICSK incorporating new tech- working standards and professional ex- additional projects. co (US$2.5 billion). This year some of Justa for Marcobre. These clients have nology in its processes and projects? perience for communities. Over time, the largest mines are investing in new recognized us for our standards of tech- With regard to innovation, two years this reduces the need for a foreign work- How could mining investment push equipment and modernization: An- nical proficiency, security and occupa- ago ICSK revised its processes to give force and makes communities self-suffi- economic recovery in Peru? tamina and Cerro Verde are spending tional health. the company more flexibility to deal cient to take on complicated projects. In The government has not managed this US$400 million each. With the country In Chile, we have been focused on un- with market variables such as the price the 22 years ICSK has worked in Peru, crisis adequately, and with regards to producing 2.5 million mt of copper an- derground mining, doing structural of copper, changes to the environment, we have witnessed the development of mining it lacks a long-term vision for the nually, every cent the copper price goes work for Codelco at Chuquicamata, and and stricter health and safety regula- an extremely talented and capable local industry. The anti-mining sentiment in up represents an additional US$50 mil- the new ore transporting system for tions. We have focused on challenging workforce. This in-country capacity will Peru is preventing the sector from de- lion in revenue. It is an opportunity the Codelco’s Andina division. We have also traditional paradigms, including a con- be the engine for economic revival. ■ veloping and a government that does country cannot miss. ■

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world by excavated volume, opened its Yanacocha underground have suffered » nos, INCIMMET’s CEO, spoke of the new animated videos to inform on critical as- Underground underground operation in August 2019, delays due to metallurgical issues mov- technology being introduced to the op- pects of safety.” allowing the state copper giant to exploit ing from an oxide ore body to a sulphide We still see many mining eration to boost productivity and cut op- As larger underground operations be- Mining the remaining resources located below ore body. However, Byrnecut remains erational costs: “Within the new fleet we come commonplace in Peru, will they fol- the current ore deposit until 2058. committed to South America in the long operators that have different will have at Cerro Lindo we purchased a low the model of using integrated con- Contractors While there are currently no large scale run, according to managing director contractors, and typically small machine that performs the cable bolting tractors? This was the question posed underground mines in Peru, there has al- Greg Jackson, as the company sees the contractors for each of the service and requires only one operator, to Diego Morales, general manager for ready been growth in this segment with move to large-scale underground mining compared to the old machines that re- Peru at Mas Errázuriz, which has been processes in underground mining medium to small scale operations, and as inevitable. quire seven for the whole process.” working on the Asana river diversion tun- THE TRANSITION TO the myriad of mining contractors active Jackson explained how Byrnecut works – but that is migrating towards Another of the major players in Peru’s un- nel at Quellaveco. “You will have one sin- LARGER UNDERGROUND in Peru are preparing for the impend- directly in the R&D phase with OEMs, a model of having one single derground mining value chain is AESA, gle contractor or, if the mine is too large, ing growth opportunities in the years to providing feedback on how equipment contractor doing the whole which achieved record sales in 2019 due several contractors in different areas who OPERATIONS GATHERS come, with the likes of Yanacocha under- can be developed to suit the specifics to a combination of new projects as well take care of everything in those specific process. This allows the client PACE ground, Coroccohuayco and Antamina of different mines. “As Peru does not yet as ramp ups on existing projects, accord- areas,” responded Morales, referencing all expected to transition underground in have experience in large-scale under- to have better control over the ing to Gianflavio Carozzi, CEO. Detail- El Teniente, one of the world’s largest the new decade. ground operations, when the transition operation. ing how a sharpened focus on safety underground mines, which employs five In 2017, a joint venture agreement was happens Byrnecut will be well placed to has been key to AESA’s growth, Carozzi contractors including Mas Errázuriz. “In The global mining industry is migrating signed between underground Australian suggest the most suitable mining meth- explained how the company reshaped older mines, it is not so simple, as ab- underground as ore grades decline and contractor Byrnecut Offshore (Byrnecut) ods and technology to implement,” he its policies, standards and procedures sorbing smaller contractors to integrate the incremental extraction of earth’s fi- and local Peruvian firm San Martín with said. - Diego Morales, in order to address a reality in Peru: low the operation presents social issues to nite resources continues. In some coun- the transition to large-scale underground Many projects also begin as underground General Manager – reading comprehension rates: “You can- the mining operator,” he added. tries, such as Canada and South Africa, mines in mind. The move to the type of operations with no open cut component Peru, not just assume that your policies, proce- Underground mining also has the chal- underground mining is the norm, with underground mining Byrnecut special- at all, such as Nexa Resources’ Cerro Lin- dures and training material are going to lenge of adapting to remote work re- Mas Errázuriz operating depths more than 3 km be- izes in – large open stopes, sub level do polymetallic mine in Chincha, one of be well understood. We thus decided to quirements while below the surface in low the surface. In neighboring Chile, caves and block caves using bulk mining the world’s 15 largest zinc mines. INCIM- use alternative methods of delivery, par- a confined space. “As Nexa runs- un Codelco’s Chuquicamata, at one point methods with large tonnage – has yet to MET is one of the contractors working at ticularly a bigger use of visual aids. As derground mining operations (where the largest open pit copper mine in the gather pace in Peru, as projects such as Cerro Lindo and Eduardo Cossio Chiri- « such, we started the use of comics and remote work is more complicated than

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How was business in 2019 for AESA and ering communities. The Dual Formation What progress has been made since the JV was signed between Byrnecut and where are you seeing demand coming program is a 1-year program consisting of San Martin in 2017? from? both theoretical and practical training, and When the JV was signed, we agreed to look for a particular style of work where we can 2019 was a very good year for AESA as we after graduation the students are incorpo- add value. We cannot compete with local Peruvian contractors for the smaller jobs that reached record sales, started new projects rated into AESA’s staff. The first program only last one year and want you to start tomorrow. Instead, we have been focusing on as well as important ramp ups on existing was launched in 2019 and we have very the larger scale underground projects, some of which have been slow moving forward, projects. We have primarily been work- high expectations moving forward. such as the Yanacocha transition, which is taking longer than expected due to metallur- ing with mid-sized and large underground gical issues moving from an oxide ore body to a sulphide ore body. The sort of mining mining operations, but two years ago How can technologies in an under- methods that Byrnecut supports globally tend to be large open stopes, sub level caves the company started working with open ground mine setting help mitigate safe- and block caves – bulk mining methods with large tonnage. Rather than using 30-ton pit operations as they were beginning to ty risks? trucks we predominantly use 60-ton trucks. transition to underground. We envision Some of the main risks in underground mi- Byrnecut remains committed to South America as we see the move to large scale under- that there will be a transition from open ning where technologies can be of help ground mining as inevitable. pit to underground as it becomes much are falling rock events, gasses, interaction more expensive to extend the mine life on between machines and people, flooding How can a large-scale underground operation benefit from Byrnecut’s expertise? these operations as open pit. We are see- and those associated with the use of ex- Byrnecut has developed expertise over a long period of time, and we have become Gianflavio ing some migration already, for example at plosives. The adoption rate of embracing Greg very good at managing mobile equipment fleets due to strong relationships with sup- Yanacocha where we have completed our new technologies is still slow in under- pliers such as Sandvik, who we work in close collaboration with to develop and improve fourth underground exploration project, ground mining in Peru, but is definitely equipment. We are used to managing and maintaining fleets to get the most out of Carozzi which should migrate into production in increasing. Jackson the machinery. We also have the mining skills in terms of being productive and getting the short term. In order to implement technologies, a cer- second-to-none rates of advances. Byrnecut is large enough to provide the best safety tain level of infrastructure is needed in the systems, operating systems and training, which has been a big part of our business for Can you explain how AESA’s innovative mine. It is also important to pay attention a long time. Brynecut is a registered training organization in Australia, and we train our approach to training helps increase and to the skills required for operators to be workforce all over the globe to the same standard, regardless of the location. develop talent? able to work with the technology. To this In 2019, AESA started a journey to re- end, we are seeing customers starting to Can you elaborate on the company’s focus on innovation? structure the way we train our employees make important moves in the direction of We are always looking for a better way to mine more efficiently and cost effectively for CEO Managing Director in terms of safety and hard and soft skills. infrastructure development and change the client. Byrnecut works directly in the R&D phase with OEM’s, providing feedback on AESA We focused on the delivery of our policies management to create the right climate BYRNECUT OFFSHORE how equipment can be developed to suit the specifics of different mines. We are cogni- and standards, the training experience of for innovative technologies to be incorpo- zant that not every mining company needs a lot of new technology, but we believe that the employee and developing training so- rated into mines. the number of mines Byrnecut works at gives us a unique ability to know what works in lutions that are unavailable in the market. different settings, and this knowledge can help guide our clients. As Peru does not yet We took a new look at safety and decided How do you think the Covid-19 pan- have experience in large-scale underground operations, when the transition happens » to reshape our policies, standards and demic will impact the mining industry as » Byrnecut will be well placed to suggest the most suitable mining methods and techno- procedures in order to address a reality in a whole? logy to implement. Peru: low reading comprehension rates, as The pandemic is causing a significant and a result of which you cannot just assume permanent impact on the mining indus- To what extent can technology mitigate the risks associated with underground that your policies, procedures and training try. It is changing the way we operate and Technologies like remote mining? We envision that there will be material are going to be well understood. interact; it is changing current health and Technologies like remote loading, autonomous driving and increased mechanization all a transition from open pit to We thus decided to use alternative meth- safety protocols in order to preserve social loading, autonomous driving help by taking operators out of the line of fire. Equipment is often operated remotely underground as it becomes much ods of delivery, particularly a bigger use of distancing, and it is changing the way we and increased mechanization all now – that could be in a small room underground in the mine, on the surface of the visual aids. We started using comics and staff operations. But it is also presenting mine, in an office in a city or even another country. It is not just safety that is improved, more expensive to extend the help by taking operators out animated videos to inform on critical as- opportunities to introduce change at a productivity is also increased with greater uptime. With the money companies have tied of the line of fire. Equipment is mine life on these operations pects of safety. faster pace as it has brought down para- up in equipment, you want to be using it as much as possible. as open pit. We are seeing digms such as remote work and the use of often operated remotely now Regarding the changing nature of mining jobs, we find that most people can adapt some migration already, for How did AESA manage to influence a technology in order to cope with the crisis. – that could be in a small room to technology fairly quickly. As the skillsets required for different job functions evolves, As social distancing becomes a necessity, there may be slightly less people working in total, but I do not believe it will have a major example at Yanacocha where change in legislation to create the Dual underground in the mine, on the we will see a bigger push for automation impact. Furthermore, automation does not make sense for everybody. If you have labor Formation program? surface of the mine, in an office we have completed our fourth Changing legislation was a two-year pro- and tele-remote operation. that is fairly cheap, it becomes an economic decision. underground exploration project. cess and we had to work closely with the All these immediate changes generate in a city or even another country. Ministry of Education. The aim was to additional cost at first, which generates a Where we you like to see the company in Peru in five years time? generate conditions that would allow us need to increase productivity to mitigate it. In five years time we are targeting having two operating contracts in Peru and a couple to create a program that combines on- Therefore, changes that had been set aside outside of Peru in South America. San Martin’s extensive presence in the region gives us the-field training with traditional training in or rejected in the past will find significant an established base in the countries we intend to operate in. We have been in Peru for classroom. This type of program develops tail wind to be revisited and implemented. almost three years, and we are playing the long game. We took time to find the right « employable skills in communities that have We are working on changes required in « partner with similar views to us as a business and as people. Now we are working with very few opportunities. This program is an order to emerge strengthened from this that partner to find the right job to add value. We know in South America relationships important tool for upskilling and empow- crisis and benefit our customers. ■ are important and you do not develop a relationship in one day. ■

PERU MINING 2020 78 Industry Explorations Global Business Reports 79 PERU MINING 2020 EDITORIAL Global Business Reports Industry Explorations INTERVIEW

at open-pit mines), the health and safety as the pandemic ensured health and is the slick line shotcrete transportation How was business in 2019 for INCIM- ployees to determine how they are be- protocols that have been implemented safety would be the fundamental prior- method – a vertical pipe that takes shot- MET and how has the company expand- having in the field and ensuring we give mean production is likely to remain at ity of 2020. One of the ways this risk is crete from the surface to depth through ed internationally? powerful feedback. Operational discipline 90-95% for the rest of 2020,” elaborated being mitigated is through technology gravity. Working in collaboration with 2019 was a very good year for INCIMMET. outlines, protocols and procedures are up- Ricardo Porto, president and CEO of and, in particular, the mechanization of Tumi Raise Boring and Robocon’s sister For instance, in Colombia we constructed dated and communicated to the staff. One Nexa Resources Perú, who mentioned services. company Tecnomecánica, Robocon can a 4.1-meter diameter, 310-meter-deep of the important aspects is visible leader- that returning to full capacity will prob- From the side of the contractor, Diego ensure the tunnel has the correct pro- mine bore for Continental Gold, the first of ship; not only stating you are a leader but ably require a vaccine. Morales stated that Mas Errázuriz now portions so the shotcrete is transported its kind in Colombia, and one of very few by showing your colleagues that you are a INCIMMET’s Eduardo Cossio Chirinos only works with semi-automatic equip- downwards efficiently. “This saves- mi in Latin America. We also won the mine strong leader by setting an example. detailed how underground contractors ment. Furthermore, the company is test- ning companies time and has significant development contract with Tambomayo – are responding to this challenge: “A ing the use of remote control electric cost benefits – the investment is paid off Buenaventura and we had the renewal of Can you provide an example of how few years ago we began the process of equipment in Chile. in only 12 months and increases the pro- our contract with Cerro Lindo – Nexa with new technology is increasing productiv- implementing digital transformation into Peruvian company Robocon is the only ductivity of the mine,” affirmed Sattler. a bigger scope, both contracts in Peru. ity and reducing costs at underground our operations, and we have seen the shotcrete contractor in the world to Another of the companies that works We recently worked for two years with mining operations? results of this during the pandemic,” he be affiliated with EFNARC (European with Robocon is Metal Técnica, the Pe- Hochschild Mining in Argentina operating Within the new fleet we will have at Cerro said, explaining that powerful IT infra- Federation for Specialist Construction ruvian distributor of Putzmeister equip- a project for Minera Santa Cruz training Lindo we purchased a machine that per- structure allows INCIMMET to operate Chemicals and Concrete Systems), and ment, including robots for the projec- Eduardo workers on mine backfill. We are exploring forms the cable bolting service and re- remotely indefinitely, both in its central has been mechanizing underground tion of concrete and concrete transport opportunities for our complete portfolio quires only one operator, compared to the office and in its projects, helping avoid processes with the likes of Buenaventura equipment in narrow-vein mining. José of solutions in the region. old machines that require seven for the contagion and unnecessary travel. and Pan American Silver. Furthermore, Midzuaray, Metal Técnica’s general man- Cossio whole process. As well as boosting pro- This sentiment was echoed by AESA’s Robocon has been integrating with con- ager, pointed to the underground seg- Although INCIMMET is known for un- ductivity, the operational cost savings are Gianflavio Carozzi: “As social distancing tractors to work on tenders for small ment as the business line that fueled Chirinos derground mining, the company has significant. becomes a necessity, we will see a big- mines that are transitioning from dry to growth for the company in 2019, with been diversifying to work with open pit When introducing new machinery, ger push for automation and tele-remote wet shotcrete, according to CEO Enrique 90% of its work coming from contractors operations. Can you expand on this? INCIMMET’s operators undergo a operation.” Sattler. rather than directly with the mines. INCIMMET is one of the few mining con- rigorous training program. The operators Discussing Robocon’s latest technolo- Elaborating on Putzmeister’s latest tech- tractors who work on both open pit and need to feel comfortable and understand gies, Sattler explained how the company nology, Midzuaray highlighted Geokret underground mining. Our first experience how to operate the machinery properly in CEO Technological Advancements in tailors its solutions depending on the 2.0, a complete solution for smart shot- in open pit mining was with Anglo Ameri- order for the mines to see the increase in Shotcrete context of the mine: “Our solutions will crete application that incorporates laser INCIMMET can at Quellaveco in 2011, where we car- production these machines can provide. transform narrow vein mining, as tasks technology. “The solution is based on ried out early earth moving work, platform Extracting ore at depth can be a compli- that used to take 1.5 days (or three shifts) the 3D high-resolution scanning of the construction, concrete and civil works. This How much of an impact do you feel po- cated, costly and dangerous business, can now be completed in 30 minutes in a underground galleries before and after side of the business really took-off for the litical turbulence in Peru has had on its and a worrying rise in the number of secure operation,” he said, adding: “The each shotcrete application, comparing company in 2017 when we started work- mining industry? fatalities at Peru’s mine sites in 2019 (40 objective is to mechanize the shotcrete results and optimizing the applications,” » ing with Barrick Gold, Freeport, Southern We have an ancient culture of mining in deaths, versus 27 deaths in 2018) height- solutions, rather than use a larger work- he explained, noting that Geokret 2.0 Copper and Chinalco. Peru with abundant resources and all ened the need to remove workers from force.” runs through a digital app designed to Currently, we have a total of seven open- stakeholders have to figure out how to areas of risk. This urgency to remove One of the innovations being used in Vol- help the operator work more remotely pit mining projects. We do not work on create value with these resources. The workers from risk was then compounded can’s Chungar mine in Peru by Robocon and enhance safety. ■ Currently, we have a total of the blasting or hauling of mineral ore yet, people involved in the mining industry are but focus more on infrastructure projects, very conscious of the weight of mining in seven open-pit mining projects. earth movement, civil and concrete works the economy. We see INCIMMET’s em- We do not work on the blasting – facilities that go hand in hand with the ployees are very proud of what they do or hauling of mineral ore yet, direct operations of the mine. and where they work as they see the op- portunities the sector provides them and but focus more on infrastructure Can you elaborate on the collaboration their families. On the other hand, social projects, earth movement, civil between INCIMMET and Du Pont? issues still remain. In my opinion, scep- and concrete works – facilities We wanted to strengthen our safety cul- tics do not know how the mining industry that go hand in hand with the ture and working with Du Pont was a very works and can be influenced negatively powerful and transformational experi- by people who have no knowledge of the direct operations of the mine. ence. We thought that we were adhering industry. to the best practices but when we began Over the last 10 years, Peru has estab- working with Du Pont, we realized there lished a middle class which did not exist were many areas we could improve in. 20 years ago. There are very few other in- 2020 is INCIMMET’s third year working ac- dustries that can improve people’s lives in « cording to what we learned with Du Pont. such a short time. To further develop this, They have helped to shift our entire busi- mining needs to consider all stakeholders ness approach to safety. and be an industry that is conscious of its We are working on seven safety aspects impact on the environment so projects can – mostly incorporating observation of em- be developed a sustainable way. ■

PERU MINING 2020 80 Industry Explorations Global Business Reports 81 PERU MINING 2020 INTERVIEW Global Business Reports

the air compressor, with different components and booms ac- Enrique cording to the size and particularities of the mine. We are on the way to consolidate the market for small tunnels in Perú, working in Panamerican Silver mines Huarón and Mo- Sattler roccan, and developing projects with Buenaventura for mecha- nization of shotcrete in small tunnels, merging from dry to wet shotcrete. We are also participating in several tenders for small mines that are merging from dry to wet shotcrete. Most of the mining companies are focused on their core business – produc- tion – and prefer to outsource all their concrete requirements to one specialized contractor. CEO ROBOCON Can you provide an example of how Robocon tailors its equipment depending on the particularities of the mine? An example of how specialized Robocon has become and how we tailor to the needs of the client is the small 1.6m by 2m electric operation equipment Tecnoshot 1.6E, and a small 1m3 How do Robocon’s shotcrete solutions cater to Peru’s di- Mixer TDMix1, that were designed, manufactured and devel- verse mining market? oped with our technical partner Tecnomecánica. Robocon has a complete range of services for the mining mar- This solution will transform narrow vein mining, as tasks that ket, this includes design, manufacture and operation of batch- used to take 1.5 days (or three shifts) can now be completed in ing plants (for surface and inside the mines), manufacture and 30 minutes in a secure operation. The objective is to mechanize operation of Slick Lines, shotcrete materials (cement, additives, the shotcrete solutions, rather than use a larger insecure work- fibers), quality controls, shotcrete transportation and applica- force. This provides a wet shotcrete solution where only 8% of tion. The range of equipment therefore also must be diverse, the material applied falls to the flaw when applied, rather than ranging from electric to diesel, large to small, equipped with traditional dry shotcrete where 40% falls to the floor.

What is the slick line shotcrete transportation method and what are its benefits? The slick line is a vertical pipe that takes shotcrete from the surface to depth through gravity. Working in collaboration with Tumi, we assure a perfect vertical Raise Boring to install the pipe and components of the Slick Lines. This saves mining com- panies time and has significant cost benefits – the investment is paid off in only 12 months and increases the productivity of the mine.

How has Robocon evolved to offer more of an integrated solution? We are integrating the business vertically to include materi- als. The production of concrete related to plants is tailored for several concrete uses and configurations. We have integrated laboratories for concrete tests to make sure the quality control is ensured. Now we are integrating a laser control to determine the correct quantity of shotcrete and control of the thickness.

What opportunities do you see for the business to grow as mines increasingly move underground in Peru? I believe there is a lot of opportunity and we are already seeing more operations in Peru such as Antamina and Yanacocha mak- ing the transition from open pit to underground. Underground mines dominate the market in jurisdictions such as Canada and South Africa, and even in countries where open pit has tradi- tionally been dominant such as Chile, where vast underground operations such as Chuquicamata are starting. As Robocon consolidates its position in Peru, we would be interested in ex- panding to neighboring countries such as Brazil, Chile, Colom- bia and Ecuador. ■

PERU MINING 2020 82 Industry Explorations GBR • Industry Explorations • PERU MINING 2020

EQUIPMENT & TECHNOLOGY

"The pandemic has accelerated remote work and remote processes in terms of operations management, including fleet management. I have spoken to many clients, including Antamina, Las Bambas and Chinalco, regarding remote control centers away from the mine site. Even with manually operated trucks, these days there are fewer workers required at site."

- Tomás Martínez, CEO, Komatsu - Mitsui Maquinarias del Peru (KMMP)

Image courtesy of Epiroc EDITORIAL Global Business Reports Industry Explorations INTERVIEW

Mining Gonzalo Equipment Díaz Pró

THE OEMS LEADING TECHNOLOGICAL General Manager ADVANCEMENTS FERREYROS S.A.

Equipment manufacturers were hit heav- ily during the lockdown, with the duel blow of operations shutting down and Have you noticed optimism return- have delivered about 30% of the mining underground, and bought Tasmanian new projects being put on hold. Howev- ing to the market in the last couple fleet, and expect to reach 50% by the equipment manufacturer Elphinstone. er, for the largest OEMs, this impact was of months? end of 2020. Today, Caterpillar has a growing portfo- mitigated by the support of long term Since August in particular, the market From a technology standpoint, both lio of underground equipment, such as a contracts with mining producers and de- has been very active. Mining companies mines will feature leading-edge inno- full size range of loaders and haulers. In Image courtesy of Ferreyros velopers that have provided ample op- are asking for new requests for propos- vation. Marcobre for Mina Justa is con- Peru, we have around 80% of the market portunity for growth in recent years and Díaz Pró noted that these new trucks are of Komatsu’s 400-ton 980 truck to several als, such as equipment additions to their sidering using, in the future, alternative share for load haul dump (LHD) equip- offer a platform for recovery in the after- joining 120 CAT 797 mechanical drive high-profile mines in Peru. fleets, with an emphasis on expanding fuels with our trucks, which can switch ment. Cat’s R1700 LHD is the future of math of the pandemic. trucks in the same class size, already run- One of the more recent entrants to the brownfield operations. The pandemic to operate with liquefied natural gas underground mining equipment, pro- Caterpillar distributor Ferreyros S.A. (Fer- ning in Peruvian mines, which represent mining OEM market in Peru, Liebherr, caused clients to reduce sustaining ca- (LNG), an economic and locally avail- ducing 40% more than the R1600, while reyros) was awarded the two largest mi- a market share of more than 75%. also echoed the sentiment of Ferreyros pex as well as investment capex, but this able resource. Quellaveco is consider- using 34% less fuel per ton. In 2021, we ning fleet tenders that have taken place Tomás Martínez, CEO of Komatsu - Mit- and Komatsu with regard to the signifi- will rebound in 2021. The message we ing many technology upgrades to their will start a project for automation and in Peru in recent years, with Mina Justa sui Maquinarias del Peru (KMMP), com- cance of 400-ton capacity trucks. “The are getting is that despite a 20% output fleet, such as autonomy packages. It will remote operation from the surface for a and Quellaveco combining for a total mented that the pandemic has acceler- most important product for us is the reduction in 2020, mining companies be a state-of-the-art mine in terms of R1700 unit. of around US$400 million in new equip- ated remote work and remote processes 400 ton truck. Almost all new mines and expect an equal increase next year. technology, and we will be there with Many mining companies here still use ment, according to Ferreyros’ general in terms of operations management, in- projects in Peru are requesting this size,” It is true that, until we have a vaccine, them. all-highway haulers for underground manager, Gonzalo Díaz Pró. Providing cluding fleet management. “I have spo- stated Ricardo Ishida, Liebherr’s general it will be difficult to return to a normal mines, but this will change and evolve an update on equipment delivery for ken to many clients, including Antamina, manager in Peru, highlighting the com- course of business. However, things are How has Ferreyros’ service center in to proper underground haulers in time. the projects, Díaz Pró commented that Las Bambas and Chinalco, regarding re- pany’s main project – a truck test with in good progress. La Joya impacted local employment In particular, the large underground by September the fleet for Mina Justa mote control centers away from the mine two 400-ton Liebherr T284 trucks. We had just introduced our new 400- since opening? projects are of great interest to us. In was almost fully delivered, on time, with site,” said Martínez, observing that even Liebherr has had a representative office ton electric drive trucks in Peru. The Ferreyros directly employs more than Peru, Yanacocha’s Chaquicocha deposit only four trucks left to arrive. Regarding with manually operated trucks, these in Peru since 2014, but started a fully- CAT 798 truck enhances our portfolio, 3,500 people in the country. More than transitioning underground will be a big Quellaveco, 30% of the mining fleet had days there are fewer workers required at fledged operation at the beginning of providing customers with the option 1,000 people work and live in customers’ step in this direction. been delivered, with the expectation to site. 2019. Ishida spoke of Liebherr’s mining to choose between electric drive and isolated mine site operations. Among reach 50% by the end of 2020. Providing examples of Komatsu’s lat- portfolio that includes a range of trucks mechanical drive trucks, both in the our main workshops, we invested US$40 Do you have a final message for the “From a technology standpoint, both est innovations, Martínez mentioned with electrical drive systems from 100 to 400-ton payload capacity. These new million five years ago in a world-class Peruvian mining industry? mines will feature leading-edge innova- the FrontRunner Autonomous Haulage 400 tons, and hydraulic shovels ranging trucks are joining 120 CAT 797 mechani- Customer Rebuild Center in La Joya, lo- I would like to see a country proud and tion,” said Díaz Pró, noting that Marco- System (AHS), which enables manually from 100 tons of operation weight to 800 cal drive trucks in the same class size cated one hour drive from Arequipa. We in-love with mining, understanding that bre is considering using alternative fuels operated equipment (such as loaders, tons. “The latest trend in the market is successfully running in Peruvian mines, aim to promote a sustainable develop- this industry is about progress for ev- to power its Caterpillar trucks at Mina dozers, graders, and light vehicles) to autonomous technology,” he said, sug- which represent a population market ment hub in this mining area, providing eryone. Peru has a complex geography, Justa in the future, which can switch to safely interact in an AHS haul truck (AHT) gesting that Liebherr’s difference is that it share of more than 75%. fair and top-class employment opportu- with huge highlands that complicate operate with locally-sourced liquefied environment, optimizing the mining op- offers an open autonomous system that nities for future generations. Today, La logistics and transport of goods. How- natural gas (LNG). eration. “Today in Peru, we are exploring allows greater flexibility because it can What progress has Ferreyros made at Joya employs 350 people, 70% of them ever, these same highlands have a lot of The move towards electric vehicles is the introduction of a fully autonomous integrate other autonomous systems. Mina Justa and Quellaveco? from the city of Arequipa. value within them, and this value needs also gathering pace, with Díaz Pró citing 240-tonne truck, which is currently at the “If the mine has an autonomous system In recent years, Ferreyros was awarded to find its way to the people. We need to Caterpillar’s new 400-ton electric drive prototype stage,” he added. ‘X’, our trucks can be integrated into that with the two large mining fleet tenders What underground mining equip- collaborate all together to achieve long- trucks that have been recently intro- Looking at performance from 2019 to system without having to change the that took place in the country – Mina Jus- ment does Caterpillar provide, and term economic progress and eradicate duced to Peru as an example: “The CAT 2020, KMMP had 71% of its sales in whole package for the entire mine,” he ta and Quellaveco, with a total combine how do you view the transition to un- poverty, looking for the greater good 798 truck provides customers with the Peru from ultra-class trucks, according explained. of around US$400 million in new equip- derground projects in Peru? and working in a harmonious coexis- option to choose between electric drive to Martínez, including 55 of Komatsu’s Several years ago, Epiroc identified ment. Mina Justa’s fleet is almost fully Around 20 years ago, Caterpillar adapt- tence between mining, population and and mechanical drive trucks, both in 400- 320-ton capacity 930 trucks delivered to three main technological trends as game delivered, on time, with only four trucks ed its strategy with a view that the natu- authorities. Tangible economic devel- ton payload capacity.” Cerro Verde, as well as the introduction changers in the mining industry: automa- left to arrive. Regarding Quellaveco, we ral trend for mining is to eventually go opment is the real engine for growth. ■ 87>> PERU MINING 2020 86 Industry Explorations Global Business Reports 87 PERU MINING 2020 INTERVIEW Global Business Reports Industry Explorations

<<84 tion, digitalization and electrification, ac- Tomás cording to Ángel Tobar, Epiroc’s general manager for the Andean region. When asked about the receptiveness of the Pe- Martínez ruvian market to new technologies, To- bar commented that at first it was multi- national operators who started to adopt these changes, but nowadays the local operators are realizing that these trends CEO are irreversible and do not want to be KOMATSU - MITSUI MAQUINARIAS DEL PERU (KMMP) left behind in the effort to maintain pro- ductivity rates at competitive levels. “Al- though not all companies evolve at the same speed, we are convinced that Peru What steps did Komatsu - Mitsui Ma- 400-tonne Komatsu 980 truck to several truction, such as Quellaveco, and new will be, in just a few years, at par with the quinarias del Peru (KMMP) take to high profile mines in Peru. Komatsu’s projects to start development in the other large mining countries in terms of deal with the Covid-19 outbreak? line of high-efficiency engines that use coming years, the introduction of au- technology development,” he said. KMMP quickly established a crisis less fuel has also been popular. The tonomous technology and remote work Observing that Covid-19 has accelerated committee to carefully develop proto- Common Rail fuel injection system for will become commonplace. the implementation of digitalization and cols and ensure the health and safety the QSK 60 MCRS and QSK 78 engines automation, Tobar highlighted that Epi- of our workers as our main priority, as improves engine life, as well as provides Can you elaborate on the community roc designs its solutions with its custom- well as implemented an action plan to a greener, more environmental solution and employee-focused programs that ers’ key issues in mind, including: “Re- re-activate operations after the first for mining customers. KMMP has initiated in 2020? quirements to reduce operating costs, months of the lockdown. Parallel to this, KMMP has been working with the Op- increase productivity, increase utilization in April, we had meetings with leaders Can you provide an overview of some erators Club initiative to improve the of equipment, reduce environmental of KMMP’s main customers to under- of the latest Komatsu technologies? employability of heavy machinery oper- impact, and especially nowadays: to en- stand their expectations, safety proto- One of the interesting innovations of ators in Peru. We have also implement- hance health and safety conditions.” col measures and in conjunction, look recent years is Komatsu’s SMARTCON- ed virtual conferences for the Technical Giving examples of Epiroc’s electric tech- for improvement opportunities from STRUCTION integrated autonomous Education for Communities program, nology that has been implemented at all standpoints: health, safety, produc- Unmanned Aerial Vehicles (UAVs) – to promote and facilitate careers in our Peruvian operations in recent years, To- tion efficiency and forward planning. drones that survey a site for project field of business. In 2020 more than bar cited the Scooptram ST7 operating We also reviewed our organization and management needs. Another innovation ever, we have reinforced the importance at an altitude of 3,800 meters above sea looked at which KMMP teams could is Komatsu’s FrontRunner Autonomous of health and safety in the workplace, level, and the company’s second genera- perform remotely and which teams were Haulage System (AHS), which enables which has been key to maintaining tion of battery-powered equipment such essential to maintain on-site work. As a manually operated equipment (such as strong, long-term relationships with cli- as the 14-ton Scooptram, drilling equip- result, by August 2020 we had 55% of loaders, dozers, graders and light ve- ents, employees and local communities. ment including the Boomer, and the 42- our workforce working at site or in an hicles) to safely interact in an AHS haul ton Minetruck. office, 33% working remotely, and only truck (AHT) environment. Regarding What is KMMP’s vision for the next 12 Despite advances in recent years, the 12% on leave. This situation has made autonomous trucks, Komatsu now has months, and do you have a final mes- transition towards widespread electrifica- the company more agile and creative, 13 years of experience, with an active sage for the Peruvian mining commu- tion at Peruvian mine sites will not hap- as well as bringing us closer to clients fleet of 240 autonomous trucks globally. nity? pen overnight, and for Giorgio Mosoni, due to frequent technical webinars that In Peru we are exploring the introduc- The company’s growth strategy is general manager at John Deere distribu- KMMP is hosting. tion of a fully autonomous 240-tonne based around the pillars of safety, tech- tor Ipesa, it is dependent on the type of truck, which is currently at the prototype nical competence, higher productiv- equipment used: “It makes perfect sense Which Komatsu machinery has been stage. ity, reliability and service. We intend for equipment such as the excavator, in high demand in the Peruvian mining to increase the incorporation of new which works from a stationary position market? Which working practices do you think technologies to mining operations in but has the rotational movement which The trend has been that clients are de- the pandemic has accelerated? Peru, including digital solutions such as creates the energy to be able to charge manding reliability, efficiency (better The pandemic has accelerated remote remote fleet management and the intro- itself,” he explained. uptime) and productivity, rather than work and remote processes, in terms of duction of autonomous trucks. “I do not think we are moving quickly to- trying to save capex. Looking at per- operations management, including fleet Peru has been one of the countries that wards a fully electric machine, as you are formance from 2019 to 2020, KMMP management. I have spoken to many cli- has suffered most during the pandemic, dealing with hydraulics and the power has had 71% of its sales in Peru from ents, including Antamina, Las Bambas but we hope this experience can make needed to move large amounts of earth, ultra-class trucks. In the last two years, and Chinalco, regarding remote control us stronger. Challenging times also so the battery technology must mature,” we have delivered 55 of Komatsu’s centers away from the mine site. Even bring opportunity and as an industry continued Mosoni, noting that hybrid 320-tonne capacity 930 trucks to Cerro with manually operated trucks, these we must use the tremendous potential equipment is becoming a lot more popu- Verde, one of KMMP’s most important days there are fewer workers required at of Peruvian mining to generate jobs and lar and allows significant savings when it projects. We have also introduced the site. For projects currently under cons- revive the economy. ■ comes to fuel consumption. ■

PERU MINING 2020 88 Industry Explorations Global Business Reports 89 PERU MINING 2020 INTERVIEW Global Business Reports Industry Explorations INTERVIEW

Can you provide an overview of Liebherr's activities and growth in Peru in the els of automation, especially in surface mi- that has recently started operations where past two years? Ángel ning, started to take off; this included both we have cutting-edge Epiroc equipment Liebherr Peru started operations at the beginning of 2019; before that there was a pre-stripping activities and production dedicated to drilling activities and rock representative office since 2014. Currently our main project is a truck test with the first drilling. As an example, we implemented support. two T284 model of 400-ton capacity. At this moment the majority of our resources are Tobar the Bench Remote System in some of Pe- focused on the assembly so as to start the test in the following weeks. This test will be ru’s open pit mines using our SmartROC How is electric technology being imple- performed in one of the most important operations in the market and will serve as a D65 drill rigs, and we consider this to be mented in Peruvian operations? showcase of Liebherr’s product and the quality of our technical support. Our mining General Manager Andean Region an excellent first step towards automation Over the last two years our battery-pow- product range is trucks from 100 tons to 400 tons with electrical drive systems. We also EPIROC in Peruvian mining. We also participated ered Scooptram ST7 has already been have hydraulic shovels ranging from 100 tons of operation weight to 800 tons. The in the country’s large greenfield projects, working successfully at an altitude of 3,800 most important product for us is the 400 ton truck. Almost all new mines and projects Marcobre and Quellaveco, so we are very meters above sea level. This piece of in Peru are requesting this size. In the medium term, our focus will be on after-sales optimistic about the future. equipment is a good example of Epiroc’s with the construction and implementation of workshops and warehouses to be able to With regards to underground mining, for commitment towards a safer and environ- provide support according to the fleet that we have in the country. a few years now we have integrated our mentally friendly operation. In parallel to Certiq and Mobilaris systems into our cli- this, the Epiroc Group has developed the How did the pandemic affect Liebherr's operations and how has the company ents’ operations. The complexity of under- second generation of battery-powered Ricardo adapted? ground mining presents many challenges equipment, providing a wider choice for It had an important impact because it paralyzed the entire operation in Peru when we for optimization, as shown by the fact that clients and allowing for a significant reduc- were starting to assemble the first trucks in the country and we had to evacuate our operating uptime can be up to 25% lower tion of diesel utilization and related costs, Ishida team from the mine site. This situation affected us a lot, but we managed to keep all underground than in surface mining. Epi- all of which while having zero emissions. the employees without any work suspension or limitation. We established a work plan roc’s technologies help increase uptime Today, our second generation of battery- during the quarantine and, in the case of technical personnel, we trained them virtu- and deliver a lower cost per tonne via mine powered equipment includes the 14-ton ally in conjunction with the factory. The virtual platform that Liebherr has is particularly Could you provide an overview for Epi- digitalization. As part of this offering, it is Scooptram, the drilling equipment (Boom- good in the technical training part. We have already restarted activities but, as far as roc’s performance in 2019 in terms of important to mention that this office cov- er) and the 42-ton Minetruck. At Epiroc, we possible, everything is handled virtually. The people operating in the mine work with projects and new technologies intro- ers the whole Andean Region that includes are fast to recognize new trends and dis- all the sanitary protocol and distancing measures. duced? Peru, Bolivia and Ecuador, and in the latter cover new ideas. We quickly get new so- 2019 was a very significant year for Epiroc, country we have participated in Fruta del lutions to market and adapt to changes in General Manager – Perú In terms of innovation, what new smart technologies and solutions from Liebherr as some mining projects involving high lev- Norte, an emblematic underground project customers’ needs. ■ LIEBHERR do you think have good potential? Do you think we are far from automated digital mining in Peru? The latest trend in the market is autonomous technology. Liebherr’s difference is that it offers an open autonomous system that allows greater flexibility, because it can inte- What do you think clients require most a market share of high single digits to high grate with other autonomous systems. If the mine has an autonomous system ‘X’, our Giorgio from OEM’s and distributors at the mo- double digits. On the Wirtgen side, HAMM » trucks can be integrated into that system without having to change the whole package ment? rollers (compacting equipment) have been for the entire mine. Machine uptime is by far the most impor- popular for road and maintenance work Compared to Chile, Peru is a few years behind in automation. Chile already has at least Mosoni tant metric when it comes to client satis- within the mine. Having superior compact- The latest trend in the market one project with autonomous trucks. There is a lot of interest from some mining com- faction. The investment that was made into ing ability plays an important role from a is autonomous technology. panies in Peru, but we are still beginning to study these alternatives. There is currently a the logistics center was particularly focused safety standpoint. on this. IPESA has reached spare parts Liebherr’s difference is that it mine under construction in Peru that is bringing a fleet that is going to be autonomous. availability close to 94%, which is the bet What are your views on the social ten- offers an open autonomous we are placing on the industry to be able sions that exist between the mining in- The mining truck market in Peru is very competitive. What is Liebherr's strategy General Manager system that allows greater to penetrate this market? to differentiate ourselves from competitors. dustry and rural communities? flexibility, because it can I think after-sales and product support is very important, because in the end the trucks IPESA While the biggest players may be focused Education is of paramount importance on giant mining trucks or shovels, IPESA’s when it comes to knowing what are the dif- integrate with other autonomous have the same load capacity as the rest of the brands, but the quality of support that you can provide is key for the customer. Without this, you can sell a product, but you focus is directed towards the mining con- ferent stages of mining, and knowing ex- systems. If the mine has an cannot have a long-term relationship and, in the mining industry, having a long-term tractor. In the space of auxiliary equip- actly how that is going to impact communi- autonomous system ‘X’, our relationship is fundamental. We have a very good product and we have to show the ment for the maintenance of the mines, ties in terms of agriculture, whether that be trucks can be integrated into quality of support that we can provide in the country. the roads, and the earth movement that is land availability, water quality or access to done in the early stages of mine develop- labor. that system without having to What are the safety features of Liebherr’s T284 truck, and how important is ment, that is where we believe we are par- It is important for mining companies to change the whole package for health and safety to the company? ticularly strong. Our proximity to our clients get directly involved by creating training the entire mine. The issue of security is extremely important to us. In our mining division we have six is what differentiates us. and job opportunities. This can create a pillars: safety, productivity, efficiency, reliability, customer support and environmental sense of ownership and pride. Communi- care. In these times of pandemic, safety has been one of the points to which we have Which of IPESA’s products have been in ties may see a road being built, and think given more emphasis, especially with the people we have in the mine. The T284 truck high demand? that this should have been built regardless « has many protection systems; a dynamic braking system, good ergonomics to facilitate On the John Deere side, the 35-ton ex- of whether the mine was developed. Local the operator's work and the option of anti-fatigue camera and other systems that mines cavator has been IPESA’s greatest success towns need to see the benefits in terms of may have. ■ story in the last 12 months, growing from employment and income firsthand. ■

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having good hardware. Furthermore, this Construction Oscar Jörgen is backed up by skilled technicians and after-sales support. and Auxiliary Jaern Sjöstedt From a technological standpoint, we have implemented connectivity solutions in Equipment our equipment and vehicles to be able to monitor uptime and prevent breakdowns. Automation is also a way in which we are improving productivity, safety and uptime. Director General VP Volvo Peru and Region North SCANIA PERU VOLVO MINING PRODUCERS Can you expand on Volvo’s ‘Iron Wom- en’ program? ARE PRIORITIZING Volvo started the Iron Women initiative to UPTIME, BUT LONGER promote the development of female truck drivers. To become qualified truck drivers, SHIFT CYCLES HAVE the women that are part of the program IMPACTED DEMAND will have practice, theory and training in simulators. The training program allows students to acquire the skills and knowl- edge necessary to drive heavy-duty trucks and obtain a license to drive vehicles of more than 12 tons. As well as increasing Mining investment to the tune of Which consideration is high on the agen- diversity in the Peruvian transport industry, US$6.15 billion in 2019, anchored by Which factors must be considered to da for Volvo’s mining clients in 2020? Iron Women also increases the number Quellaveco, Mina Justa, and a diverse ensure a high rate of product avail- There is an increased focus on the im- of professional and responsible drivers to portfolio of active mining operations, ability? portance of uptime. We want to offer a recruit for our customers. We have had a offered a wealth of opportunities for The configuration of the product is im- premium solution to our customers and great throughput with this program, and manufacturers specialized in construc- Image courtesy of Scania portant when it comes to availability. therefore we must guarantee premium what is even more rewarding is that some tion equipment and auxiliary mining Details of the customer’s operations uptime. Being able to assure availability of our clients have hired women gradu- trucks. However, Covid-19 disrupted I have worked in this industry, it is the ses to transport mine employees to and can make a huge difference in terms of to clients starts from the design phase and ated from this programs. ■ these opportunities in a multitude of first time I have seen the Peruvian mar- from the workplace. component durability, and Scania works ways, not only due to the operational ket being able to offer solutions which The need to maximize uptime was also closely with clients to design suitable paralysis, but also in the way mines op- are as technologically advanced as any- reinforced by Oscar Jaern, CEO at equipment. Preventative maintenance is This is due to compliance with more erate in the new normal. where in the world,” he stated. Scania Peru, who mentioned how the also very important to analyze data that José Antonio demanding environmental regulations, “In 2020 it is like we have had four For Jörgen Sjöstedt, VP Peru and Re- configuration of a product is important helps avoid breakdowns and reduce which in the case of our vehicles, comply months of activity taken away, principal- gion North at Volvo, innovation has when it comes to availability. “Scania’s downtime. Heredia with the EURO 5 standard and the Emis- ly because of the impact the pandemic helped truck manufacturers guarantee Heavy Tipper has a reinforced high sions Regulation 025-2017-EM, which has had on various business sectors,” uptime, the key client consideration for line, suspension, breaks and various How is Scania Peru working to miti- regulates the reduction of the sulphur reflected José Antonio Heredia, trucks 2020. “Being able to assure availability components which are specifically di- gate environmental impacts? Trucks Division Manager content below 50 ppm. Fuel accounts division manager at Mercedes-Benz to clients starts from the design phase,” mensioned for mining environments,” Sustainability is the highest point on for approximately 40% of the operating DIVEMOTOR distributor, Divemotor. “In the mining explained Sjöstedt. “From a technolog- he said, commenting that details of Scania’s agenda, and we work within costs associated with hauling materials industry, companies have preferred ical standpoint, we have implemented a customer’s operations can make a a three pillar framework – energy effi- in a mining project, and Divemotor's new workers to move around less, creating connectivity solutions in our equipment huge difference in terms of component ciency, alternative fuels and electrifica- range of vehicles can reduce this cost by longer shift cycles and therefore lower- and vehicles to be able to monitor up- durability, and therefore Scania works tion, and intelligent and safe transport. 5%. ing the demand for transportation to time and prevent breakdowns,” he con- closely with clients to design suitable We are trying to reduce the CO2 impact The applications most demanded by and from the mine sites,” he explained. tinued, pointing to automation as a way equipment. “For preventative mainte- of Scania’s vehicles. We also offer many the mining sector are the tractors, which On a more positive note, Heredia ob- in which Volvo is improving productiv- nance is also very important to analyze solutions with alternative fuels, and have move the mineral concentrate to the served that the pandemic has accelerat- ity, safety and availability. data which helps avoid breakdowns and gas solutions on all Scania trucks. Tailor- ports. Our Freightliner 114SD Tractor is ed digitalization, especially for smaller Regarding the source of equipment de- reduce downtime,” he added. ing vehicle dimensions to the client’s designed to ensure maximum reliability vehicles, as clients demand a lot of in- mand, Sjöstedt revealed that small and Scania made the news in October 2020 operations and needs and avoiding ac- even in the most severe conditions. The formation and data to help them make medium sized mining operations are due to the announcement that it had cidents through safety features allows new Mercedes Benz Dump, our "Arocs decisions. Moreover, Heredia believes the sweet spot for Volvo Peru and its delivered the largest single fleet of mi- for our vehicles to have less impact on Minero" 8x4 configuration, which in- that Peru is now in a position to supply area of focus for the coming years. He ning trucks in 2020. The order was for the environment. Furthermore, Scania What solutions have been in high de- corporates hydraulic components in its the latest mining trucks to the market, added that Volvo’s main work comes in 77 units to three underground mines has signed a UN global contract which mand from Divemotor's mining divi- transmission, is a unique innovation in citing the 6x4 dump truck segment (41 the construction phase of the mine, fol- in the center and south of the country, consolidates all of the company’s sus- sion? the sector. The Arocs Minero 8x4 has tons gross vehicle weight) and 8x4 seg- lowed by logistics – transporting miner- through an operating lease with Dinet, tainability initiatives. The company has a In the last two years, the new technolo- levels of reliability, safety and productiv- ment (50 tons) as being in particular de- als from the mine to the port as well as a contractor working for Nexa Resour- clear objective to reduce its CO2 impact gies available in our portfolio have sig- ity not previously achieved by a conven- mand for new projects. “In the 30 years fuel to the mines – and providing bus- ces at its Cerro Lindo mine. ■ in half by 2025. ■ nificantly reduced fuel consumption. tional dumper. ■

PERU MINING 2020 92 Industry Explorations Global Business Reports 93 PERU MINING 2020 EDITORIAL Global Business Reports Industry Explorations

this respect and this shows that the industry is transforming,” said nized rock bolters that utilize J.H. Fletcher’s Underground Pease, explaining that with a mechanized approach the efficiency HV32 (hydraulic valve) rockdrill, at a total of the blasting process can be improved, risks and costs can be height of 0.5 meters. “This minimal rock- Equipment reduced, and safety levels increased. drill height allows JH Fletcher the ability to Competing against the global dominance of international OEMs is offer the shortest mechanized remote (au- a daunting prospect, but Peruvian underground mining equipment tomated) roof bolt modules in the market.” THE PUSH FOR MECHANIZATION AND manufacturer Resemin has carved out a niche for itself and sold On the subject of trends in underground mi- AUTOMATION IS ACCELERATING machines in five continents. Resemin’s Muki equipment, suited ning innovation, Echevarría pointed to data for smaller tunnels of 3x3 meters, and with four applications (drill- transformation as being more relevant than ing, scaling, roof bolting and cut-and-fill mining) continues to be before, with analytics necessary to manage While the underground market in Peru currently lacks large-scale a standout product for the company, but in recent years Resemin customers’ organizational operational data mines such as Codelco’s El Teniente or Chuquicamata in Chile, a has expanded into the utility vehicle space as well. James Valenzu- flows more effectively. “The application of variety of small to medium sized operations offer the chance for ela, Resemin’s founder and CEO, spoke of his company’s evolution: data analytics is at the forefront of creating both national and international players to establish a foothold be- “Approximately two years ago, Resemin started to produce utility real time value across the productive sup- fore the impending transition to depth. One of the global leaders vehicles, challenging Normet who are the leaders in the market. ply chain for underground mining clients.” in underground mining equipment is Finnish company Normet, Today we produce scissor lifts, personal carriers, scalers, and emul- In the underground mining space, the range which has a fleet of 270 machines in Peru. Franklin Pease, gen- sion and ANFO chargers.” of equipment, infrastructure and software eral manager at the company’s Peruvian branch, has noticed an DSI Underground supplies innovative technologies for under- necessary to operate can drive up both increasing industry push for mechanization and automation in the ground mining and tunneling, and has been in Peru since 2008, capex and opex. With that in mind, Guido last 12 months, but noted such changes take time: “Mechaniza- moving to a new plant in Callao in 2018. Carlos Leigh, DSI’s CEO Perez, Latam and US regional director at tion requires a cultural change and modifications to the planning for Latin America, mentioned that the company, which has been Micromine, spoke of the latest technology processes of mining companies, so change does not happen over- working at Chuquicamata in Chile for over 13 years, already pro- the mining software company is currently night. You also need better training; people need to be prepared duces most of its underground products in Peru. Leigh highlighted developing that can lower costs as well as to make sure that the operation reaps the right benefits.” temporary products such as friction bolts as being popular in the improving operational performance: “We One of the processes that is becoming mechanized is the charg- Peruvian market, including DSI’s OMEGA-BOLT – high pressure in- are working on innovations that combine ing of explosives for blasting, either ANFO charging or emulsion flatable bolts used to secure a variety of ground conditions. machine vision and deep neural networks, charging. “We are working very closely with some of our clients in On September 1st, 2020, a JV was signed between DSI Under- similar to technology seen at airports where ground and ventilation firm, ABC Technology Group, to launch DSI a camera recognizes your face through sig- Underground Ventilation Systems. The JV will offer a portfolio of nals painted on the walls. This negates the products including FlexLine and semi-rigid HardLine ducting for need for extensive and costly underground positive and negative airflow, high-efficiency Toughvent fans which network infrastructure.” ■ increase pressure with lower diameters and decreased energy con- sumption, as well as a range of accessories. Discussing the motiva- tion behind the JV, Leigh underlined the importance of ventilation » to underground mining operations from a production cycle and Today we are seeing data cost standpoint: “The time it takes to remove the dust in the mine so work can commence makes a big different to operational ef- transformation as more relevant ficiency, and the costs of ventilation are also important from an than before, and our equipment energy standpoint, especially those in high altitudes such as most is built to provide such analytics of the mines in Peru.” necessary to manage customers’ Austin (previously Austin Engineering) supplies customized equip- organizational operational data ment to large global mining clients, mining contractors and OEMs. flows more effectively. The In 2019, the company was recognized by the Australian Financial Review (AFR) as one of Australia and New Zealand’s most inno- application of data analytics is at vative companies of the year for its two-piece excavator bucket. the forefront of creating real time Building upon the success of its open pit equipment, the company value across the productive supply has adopted a strategy to customize equipment for underground chain for underground mining operations, according to Luis Flores, general manager of Austin clients. Peru. “Austin’s JEC underground body features a lightweight, curved design to reduce material hang-up and overall operating costs,” he explained, mentioning business partnerships with un- - Alonso Echevarría, derground contractors such as AESA as key entry points into the Executive Director – market. Latam, The growing trend for mechanization in underground mining is JH Fletcher nothing new for US-based manufacturer J.H. Fletcher & Co, ac- and Co. cording to Alonso Echevarría, J.H. Fletcher’s executive director for Latam, who remarked that the company has been designing mech- anized products for decades. These include automated mecha- « PERU MINING 2020 94 Industry Explorations Global Business Reports 95 PERU MINING 2020 INTERVIEW Global Business Reports Industry Explorations INTERVIEW

Resemin made a US$10 million invest- and compact, which makes them ideal for 40% more than the current machine due James ment into the company’s production narrow vein underground operations. Re- to the sodium nickel battery being used. Franklin plant in 2019. What where the reasons semin’s roof bolter equipment is also in behind this investment? high demand, and we truly believe that How does Resemin’s equipment im- Valenzuela From 2016 to 2018, Resemin increased we offer the best bolting turret on the prove safety? Pease production volumes by 50% per year. market. Resemin’s scalers and roof bolters reduces In 2018, the company produced 120 the risk of falling rocks in an underground machines, but due to challenges expe- How has Resemin’s product offering mine as rock anchors can be installed to General Manager CEO rienced, we produced approximately evolved in recent years, and what new keep the roof of the tunnel stable. There NORMET RESEMIN 100 machines in 2019. We saw that we technologies do you have for the mar- is no equipment in the market better needed to bring about change in our ket? suited for smaller tunnels of 3 meters by business and in order to increase produc- In underground mining, there are three 3 meters than Resemin’s products, which tion capacity we decided to make this in- kinds of machines – jumbos, loaders and as well as being the most productive in Please provide some insights about Normet’s line of equipment for under- vestment in a new facility. Currently only utility vehicles. Approximately two years this space, also have the highest safety Normet’s business in Peru in 2019? ground mining? assembly is done at the new facility, but ago, Resemin started to produce utility standard. 2019 was a good year in spite of the po- Mechanization involves incorporating a we plan to move all of Resemin’s opera- vehicles, challenging Normet who are the litical issues that have been a bit of a dis- stronger technology base. For instance, tions there by the end of 2020. leaders in the market. Today we produce What are Resemin’s principal objectives traction. The mining industry has contin- the industry is increasingly aware of shot- scissor lifts, personal carriers, scalers and for 2020? ued to evolve toward more sophistication, crete waste in the operation, which rep- Which of Resemin’s machines have emulsion and ANFO chargers. Resemin is Resemin’s main objective for 2020 is to with a stronger push for mechanization resents very important costs. In order to been in high demand over the last 12 doing well in the utility vehicle space, but increase production capacity to again be and automation. Today, we have a fleet control the shotcrete rebound, you need months? we are still in the development stages. able to produce approximately 120 ma- of around 270 machines in Peru and this to provide more training and also to col- Resemin’s MUKI range of equipment is An important developed we have made chines a year. Our vision moving forward is figure is quite stable – there are no new lect real-time data. Also, the industry is a game changer in the underground mi- in recent years is incorporating air-condi- to be a leading corporation in the national projects at the moment, so most of the asking for machines with compressors on- ning space and is still the product that is tioned cabs on all of our machines. Re- and international mining industry, with a sales come from fleet renewal. board and power packs to connect to the most in demand. The MUKI equipment is semin is also launching the first battery complete product range of innovative, mine’s grid, so they do not need to use a standout in the market and Resemin’s powered front-face drilling rig in the Peru- easy to use and specially designed high- What underground processes are being diesel. This is in line with the trend to re- competitors do not have an equivalent to vian market in February 2020. These rigs quality equipment to solve different needs mechanized at the moment? duce emissions and pollution. At Normet, these machines. The machines are small will have an initial cost of approximately in underground mining operations. ■ For example, the charging of explosives we have several models to spray the shot- for blasting processes, either ANFO crete, including the Alpha 20 and the Al- charging or emulsion charging. We are pha 30. In Peru, the Alpha 20 is our best- In Chile there has already been a transi- were lifted, and August was a very good negative airflow, high-efficiency Tough- working very closely with some of our selling unit, but as mines become bigger Carlos tion to large underground mines, such month despite some of the mines remain- vent fans, made in South Africa, which clients in this respect, and this shows we will see a transition towards the Alpha as Chuquicamata. Do you expect to see ing closed. In Chile, the lockdown started increases pressure with lower diameters, that the industry is transforming. With a 30 in the years to come. Leigh a similar transition in Peru in the com- later, but recovery in September has been decreasing energy consumption, and mechanized approach, you improve the ing years? positive. Interestingly, Brazil and Mexico, other ventilation accessories: curtains and efficiency of the blasting process, while Do you think the electrification process At the moment, we are seeing some which have had important infection rates, coverings, emergency shelters, inflatable you reduce risks and costs. In Peru, we are will also result in more autonomous iconic mining projects in Peru that are cu- have not been impacted much from a mi- AirStop and repair kits. DSI Underground already working with Exsa, a blasting so- battery-powered equipment, rather rrently unable to be developed because ning standpoint. Ventilation Systems will count with a full lutions provider, in the mechanization of than machines that plug in to the grid? CEO – Latin America of social issues. In the short term, we do engineering and design services, support- blasting processes in several units of Nexa We already have battery-powered equip- DSI UNDERGROUND not envisage a prompt change to this On September 1st 2020, a JV was ed with our partners of ABC in Canada. Resources. ment in several mines abroad, including dynamic, but nonetheless we are already signed between DSI Underground shotcrete sprayers and mixers. We do not prepared for any transition underground. and ventilation firm, ABC Technology How is DSI Underground incorporat- Do Peruvian mining operators have the have any units locally yet, but they would DSI Underground already produces most Group, to launch DSI Underground Ven- ing digitalization into its processes and right mindset to introduce mechaniza- be highly appropriate in a country like of its underground products in Peru, being tilation Systems. Can you elaborate on products? tion? Peru, where diesel engines are significant- a country that uses an important number this venture? Since the beginning, we have been fo- Mechanization requires a cultural change ly affected by the altitude. of temporary products, such as friction Ventilation is fundamental to underground cused on mechanizing our products and and modifications to the planning pro- ® bolts. These include OMEGA-BOLT mining. When we talk about underground systems to support safety and improve cesses of mining companies, so change Beyond underground equipment, how – high pressure inflatable bolts used to support to improve the production cycles, production cycles. In recent years, we does not happen overnight. You also are Normet’s other businesses doing? secure a great variety of ground condi- this is particularly key. The time it takes to have also been embracing the rise of digi- need better training: people need to be We are steadily increasing our sales of ad- tions. remove the dust in the mine so work can talization, for both internal processes and prepared to make sure that the operation ditives for shotcrete production. Today, commence makes a big different to op- customer support. We have started test- reaps the right benefits. An important the trend is that it is the contractors who How has Covid-19 impacted the com- erational efficiency, and the costs of ven- ing new digital innovations internally and aspect of this evolution is that, when you manufacture the shotcrete onsite – it is no pany’s operations in Latin America? tilation are also important from an energy in the field, which offers clients full trace- include mechanization, you can collect longer a cement company taking care of Latin America is an important region of standpoint, especially those in high alti- ability. This helps customers administrate plenty of data that can be analyzed and that. The industry is increasingly looking production for our company and the sud- tudes such as most of the mines in Peru. DSI Underground’s underground support applied in future automation processes. for integrated contractors that can offer all den lockdowns in Peru and Argentina af- The product portfolio of the new joint products, allowing them a new scale of the required services, from mine develop- TM fected this side of our business. Peru has venture will include FlexLine and semi- management in the full process. ■ How is technology changing, over- ment to rock support, so there are differ- TM recovered well since lockdown restrictions rigid HardLine ducting for positive and all in the industry and particularly in ent ways in which we can support them. ■

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How has the opening of Rexroth’s nance. In simple condition monitoring, Equipment new service center in Arequipa im- sensors are used to watch over equip- proved the company’s offering? ment and alert the owner to any changes Components Since its foundation in 2017, Rexroth had in operating parameters, such as RPMs, planned to establish a service center temperature and pressure. A solution in Arequipa with the goal of giving our can be created with relatively few sen- business a boost. Having a service cen- sors and a minimal amount of standalone THE BENEFIT OF DATA- ter in Arequipa means that we are closer hardware, at a cost far less than that of a DRIVEN SOLUTIONS to customers and can mitigate some of production stop. The data from the sen- wear and reports the need for replace- and will create a service order. Vásquez the logistical difficulties in the southern sors can be used for monitoring much ment when critical limits are reached. added: “A technician will be sent onsite region of Peru. We were in the process of more than alerts. Analyzed properly, it “Scheduled, on-time replacement re- even before the client finds out that refurbishing before the Covid-19 quaran- can help determine when a machine is at Far from being the sole domain of the duces the risk of machine stoppages there is a problem.” tine and plan to officially open the center risk of breaking down – so that corrective largest OEMs, innovation is also influ- and thus increases machine availability. One of the industry leaders in compres- in Q4 2020. maintenance can be planned in advance. encing the product offerings of compa- At the same time, this approach lowers sor technology, Atlas Copco, offers We are confident that we will gain a sig- Predictive maintenance has many advan- nies further down the value chain, such maintenance costs since only actually a remote monitoring solution called nificant amount of service business in the tages: reduced need for on-site spare as providers of equipment components. worn components are replaced,” he ex- Smartlink, a device that sends data to Kai Southern part of Peru. The company has parts, fewer demands on service person- Rexroth, a German hydraulic drive spe- plained. a central server. Vicente Trenado, gen- good relationships with the mines in the nel, lower energy consumption and more cialist that forms part of the Bosch Data-driven solutions are also driving eral manager of Atlas Copco Andean region, but our main business in that part reliable production. group, has been expanding in Peru in business growth for another German Region, described how the data is dis- Rothgiesser of the country has been in components recent years, opening a new service company active in Peru – compressed played in a website which is accessible and sales. We will now be able to provide How do you view the current health center in Arequipa to mitigate logistical air specialists Kaeser Compresores. by the end-user, so they can access high quality services to clients operating of the Peruvian mining industry? challenges and help with aftersales, ac- Marco Vásquez, general manager of real-time information on their com- in the South. Peru has many advantages – production cording to general manager, Kai Roth- Kaeser Compresores Peru, explained puter or cell phone from any location. costs, energy costs and labor costs are giesser. Rothgiesser revealed that 80% how the company’s air-on-demand “This can be for any equipment, and Can you highlight some of the pro- relatively low. There is also still a lot of of all hydraulics in Peruvian mines are product works: “The Sigma Air Man- gives maintenance teams the relevant jects Rexroth is involved in? opportunity in the country as many mi- Rexroth products, and this level of pen- ager (SAM) 4.0 acts as the central head readings where they can see working Rexroth is involved with almost all the ning sites have already been identified, General Manager – Peru etration has opened the door to service that controls the individual equipment conditions, temperature and pressure- mines in Peru in terms of components but not yet developed. I believe that the opportunities: “Traditionally, Rexroth with maximum efficiency while adjust- drops, among other things. From Atlas REXROTH and sales, and 80% of all hydraulics in Peruvian mining industry is on the right has been offering repair and aftersales ing the flow capacity according to the Copco’s side, we can do data-mining; the mines in Peru are Rexroth products. path and the industry is continuously im- services to the market, but in recent demand,” he said, elaborating that in other words we can contact the cus- This level of penetration opens the door proving. There is a willingness to adopt times we have experienced a very high predictive maintenance capabilities ac- tomers proactively when we see there for us to service the mines. The company new technologies to increase efficiency demand for condition monitoring.” tivate an automatic service response. is an irregularity or a risk,” said Trena- does not only work with mines directly, and productivity. Rothgiesser claims that Rexroth’s condi- This way, if there is a problem with any do, adding that Atlas Copco uses this » but also has very good relationships with tion monitoring solutions are unique in of the components of the compressed data-mining to research and develop the mining contractors and OEMs. What are Rexroth’s main objectives the Peruvian market, detailing how con- air station, the system will identify the the next generation of products it will for 2020 and outlook for 2021? dition monitoring constantly measures unit and what parts have to be changed, produce. ■ Condition monitoring Which of Rexroth’s technologies have Rexroth saw high growth rates in 2019 constantly measures wear been in high demand recently? and we aimed to continue on this path in and reports the need for We have experienced a very high de- 2020. The Covid-19 pandemic, however, mand for condition monitoring. We have greatly affected the Peruvian market and replacement when critical identified this as a high growth business the operations of our customers. We had limits are reached. Scheduled, area for us and in 2019, we presented some very difficult months, but now see on-time replacement reduces new monitoring solutions to the market. a solid recovery. In August we reached the risk of machine stoppages Rexroth’s condition monitoring solutions the level of 2019 again and expect 2021 are unique in Peru. Condition monitoring to exceed the growth planned for 2020. and thus increases machine constantly measures wear and reports We are optimizing the business and ex- availability. At the same the need for replacement when critical pect to grow very quickly in the areas of time, this approach lowers limits are reached. Scheduled, on-time sales and services. The company also maintenance costs since only replacement reduces the risk of machine wants to be known for its capabilities stoppages and thus increases machine in interconnectivity and providing top actually worn components availability. At the same time, this ap- quality industry 4.0 solutions. Addition- are replaced. proach lowers maintenance costs since ally, we see opportunities for growth as only actually worn components are re- the Peruvian mining industry starts more placed. As with any data-driven service, underground operations. The under- condition monitoring is only attractive ground mining environment is tougher « if it offers both security and value. But on components, which is advantageous the real value is created when condition for Rexroth as there are then more ser- monitoring becomes predictive mainte- vice opportunities. ■

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locations, condition reports, and predictions workload and need the product provider to How has the pandemic impacted Mar- we also have a really strong team in Areq- Comminution of when blades have to be replaced.” offer the installation service,” he related, tin Engineering’s Latin American opera- uipa, and have expanded our footprint to Martin Engineering serves clients including adding: “To help with this we created the tions? the north of the country as well. We serve and Material Southern Copper, Cerro Verde, Las Bambas Luis Barrio Samanez Training Center (Cen- The mining industry in Latin America has clients including Southern Copper, Cerro and Miski Mayo, and has adapted to the tro de Capacitación Luis Barrio Samanez) in been heavily affected, with some opera- Verde, Las Bambas and Miski Mayo, to Handling strict travel restrictions during the pandemic 2019, responsible for training the qualified tions reduced to 50% or stopped com- name a few. In Peru, we are implementing by putting on technical webinars to give personnel we need to provide conveyor belt pletely. In Brazil and Chile the mines re- a stand-alone pneumatic tension system for Like the rest of the mining value chain, com- support to customers, something that has maintenance and tire repair.” mained more active, but in Mexico, Peru our cleaners that will keep the tension to panies involved in the technology for min- been particularly popular in Peru, according Karina Zevallos, managing director of Weir and Colombia the lockdowns were stricter. the required level (whether it is for primary, eral handling and processing facilities were to Schmal. “The idea is to train local teams Minerals Peru, who remarked that a sig- From a business standpoint, the pandemic secondary or tertiary cleaners) all the time, impacted by the sharp reduction of opera- to be safer, cleaner and more productive, nificant portion of the company’s revenue has emphasized the importance of remote until the blade runs out. This saves time tional capacity in March. However, as the and we have now taught thousands of cus- comes from aftermarket sales and services, access to operations and remote monitor- and money, as well as reducing risk. companies providing solutions for services tomers throughout the Americas since lock- also highlighted the importance of provid- ing of equipment, products and facilities. deemed “essential”, such as flotation, heap- down began.” ing a complete solution. Zevallos listed mill Do you think mining companies are leaching and tailings management, this sub- One of the Peruvian players in the segment, liners, valves and comminution as the prod- What new technologies and processes more willing to adopt new innovation segment of the industry has been able to Tecnomina, celebrated its 50th anniversary ucts that have been the biggest drivers of has the company been developing in these days? weather the storm better than others. Fur- in 2020, and has gone through a modern- growth for Weir Minerals, and spoke of the Javier line with the new working conditions? This differs depending on the country and thermore, with mining producers looking to ization process in recent years, according importance of training, particularly from a We have been working on technology for depending on the company, but certainly make up for lost time and take advantage of to general manager, Fernando Barrio. Tec- diversification standpoint: “Considering remote monitoring, involving electronics, people are asking more about innovation high metals prices, there should be a great- nomina represents Rema Tip Top, providing that our customer base is very diverse, our Schmal sensors, analytics and also the mechanical and new technologies these days. Industry er appetite for technologies that increase assembly and splicing services for steel and employees also have to be,” she said, citing side, so it will be safer to service our prod- leaders such as Vale, Newmont and South- the volume and efficiency of processing. canvas-cable conveyor belts for clients such Weir Minerals’ collaboration with Yanacocha ucts with less frequency. Something else we ern Copper are some of the most active in “When things restart and ramp up, there as Southern Peru, Antamina, Cerro Verde, to attract new talent. “We have offered a have been doing a lot of, in Peru especially, these conversations around Industry 4.0. In could be a lot of opportunities as mining Las Bambas and Antapaccay, and Barrio training course for students where they can is technical webinars to give support to the past, we used to deal with the mechani- producers look to compensate for lost revealed how the company has adapted to see how we operate on site and in practice Martin Engineering’s customers. The idea is cal and engineering departments, but now production by increasing throughput,” re- sell complete solutions instead of products: to encourage them to further their studies in to train local teams to be safer, cleaner and we are dealing with the IT departments. flected Fernando Samanez, vice president “These days, customers want to reduce their a mining industry direction.” ■ more productive, and we have now taught Vice President – Latin American of mining equipment and sales for the Pa- thousands of customers throughout the How do you view Peru as a mining juris- cific Rim at Metso, speaking in April. “When MARTIN ENGINEERING Americas since lockdown began. diction compared to other Latin Ameri- plants are restarted and looking for 5% more can nations? throughput, for example, new technology Can you elaborate on the features of When Peru really realizes and accepts it is a will have to be implemented,” he added. Martin Engineering’s N2 Position Indica- mining country, it will do even better than Samanez remarked that the majority of new tor for belt cleaners? it currently is. For instance, Chile and Brazil Metso products coming out, such as primary » Martin Engineering’s N2 Position Indica- really believe that they are mining coun- gyratory crushers, filters and the latest mi- tor is a sensor for belt cleaners that allows tries and support the mining industry much ning crushing solutions, consider two things: for remote monitoring of the belt cleaner more than in Peru. While Peru is not yet one “Modularization, in other words transport- blade. This senses how the cleaner is work- of the largest markets for Martin Engineer- ing modules fully assembled to site; and Martin Engineering’s N2 Position ing, its tension and position; it has an alarm ing, it does hold huge potential for growth, secondly optimizing the design and engi- Indicator is a sensor for belt equipped if there is an accident such as a much more than in Chile. Despite the chal- neering of next-generation equipment that cleaners that allows for remote fire, and lets the customer know the wear- lenges in the country, we grew by double has already been developed by adding au- life of the pieces. The sensor sends all the digits in Peru in 2019, and have high expec- monitoring of the belt cleaner tomation and e-controls.” data to a gateway that analyzes it to pro- tations for a strong rebound in 2021 after The development of smart equipment was blade. This senses how the vide important information for the cus- the disturbance of the pandemic. also touched upon by Javier Schmal, vice cleaner is working, its tension tomer through an app or computer, and president for Latin America at Martin Engi- and position; it has an alarm also for Martin Engineering to continuously What is Martin Engineering’s vision for neering, who elaborated on his company’s develop and improve our products. This is the future? N2 Position Indicator – a sensor for belt equipped if there is an accident real time information delivered remotely, Martin Engineering wants to be recognized cleaners which allows for remote monitoring such as a fire, and lets the that includes locations, condition reports, as a global leader in mining technology of the belt cleaner blade: “This senses how customer know the wear-life of and predictions of when blades have to be and strengthen our presence in Latin Amer- the cleaner is working, its tension and posi- the pieces. replaced. ica. Importantly, we want to work closely tion, it has an alarm equipped if there is an with our customers, communities and our accident such as a fire, and lets the customer What are some of the standout mining families. The industry needs to be more re- know the wear-life of the pieces.” Schmal projects Martin Engineering has been sponsible with the environment, and Mar- went on to explain that the sensor sends working on in recent years? tin Engineering is focused on preventing data to a gateway which analyzes it and We work with the main players across Latin waste with its products. We offer solutions sends information to the customer through « America, having specialized technicians that will give long-term benefits to clients, an app or computer. “This is real time in- close to the projects of our key clients. Mar- and we are open to work together on this formation delivered remotely, that includes tin Engineering’s Peru HQ is in Lima, but innovation process. ■

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sity, and Covid-19 has caused a level of startup Minetell created an enterprise Fernando Karina strengthened our presence in this mar- The Digital disruption not seen since the Second SaaS (software as a service) platform ket through products such as washers, World War, accelerating the develop- that measures and monitors Covid-19 Samanez Zevallos screens, crushers, and scalpers. Mine ment and implementation of a number risk exposure and control performance, of new technologies. offering a 60-day free trial of this solu- Can you elaborate on Weir Minerals’ From a safety standpoint, the mining in- tion to help essential service workers focus on diversity? dustry has had to mitigate the risk of the during the height of the pandemic. Considering that our customer base is virus spreading, a particular challenge “Our platform delivers actionable and very diverse, our employees also have as operations ramped up while infec- reliable information into the hands of VP Mining Equipment & Sales PACRIM Managing Director to be. We are in contact with academic INNOVATION HAS BEEN tion rates remained high. “Covid-19 is decision-makers so they can ensure METSO WEIR MINERALS PERU institutions in the areas we operate to FAST-TRACKED AS accelerating the adoption of certain their workplaces are safe for their em- attract the diverse talent we require. In technology-based solutions in order ployees and their families, contractors collaboration with Yanacocha, we have REMOTE WORK BECOMES to be more efficient and more secure,” and community partners,” explained offered a training course for students COMMONPLACE said Marcos Wieland, general manager Michael Hartley, CEO and founder of where they can see how we operate on- of digital transformation company Si- Minetell, who added that the remote site to encourage them to further their tech, part of the Ferrycorp group that deployment model the company has studies in a mining direction. includes Caterpillar distributor Ferrey- been using since its inception two years We are also trying to encourage more The term disruption, at least in the con- ros. “For instance, the vision of having ago means it does not have to adjust to women to enter the mining industry, text of innovation, has positive connota- a paperless mine through digitalization the current context. something I am passionate about as a tions indicative of progression. On the is becoming a must,” affirmed Wieland, Another company to have helped mi- director of Women in Mining Peru. I be- other hand, the definition of disruption explaining that the use of digital tablets ning companies during the lockdown is lieve that there is still not enough female – disturbance or problems that inter- negates the need for workers to pass Micromine, which offered free licenses Where is the most demand coming representation in the industry due to a rupt an event, activity, or process – is paper to each other, helping to mini- to its software for the month of April, from for Weir Minerals’ products and lack of proactive measures from mining rarely seen as a good thing, particu- mize person-to-person contact. as well as free online training. “In one services? companies. People tend to talk a lot, but larly for profitable operations in an in- To respond to the need for mining com- day, we had 1,500 requests for licenses Does Metso design tailor made In Peru, there is a lot of demand for rub- unfortunately there has been more noise dustry that has been averse to change. panies to ensure the health of mine globally,” said Guido Perez, Micro- equipment or opt for a more stan- ber linings, hoses, pumps, mill liners, cy- than action. However, we are starting to Nothing breeds innovation like neces- workers and their families, Canadian mine’s Latam and US regional director, dardized approach? clones, valves and comminution. In 2014, see companies increase and promote di- Certain types of equipment should be Weir Minerals acquired the American versity in their work forces, but I believe made to order, but Metso is trying to in- comminution company, Trio, which has there is still a long way to go. ■ crease the production of standardized equipment. For example, apron feeders are sized based on width, length and power, and can provide optimal results with standard units. The engineering company is in a transformation pro- can be modified slightly, but the design Fernando cess, moving from a family culture to a remains the same for different sizes. corporate culture. For instance, we are The majority of new products coming Barrio implementing ERP (Enterprise Resource out, such as primary gyratory crushers, Planning) and SAP systems to be able filters and the latest mining crushing so- General Manager to have greater control over the costs lutions, consider two things: transport- TECNOMINA of operations. ing modules fully assembled to site; Today, we not only have first level and secondly optimizing the design and products as representatives of Rema engineering of next-generation equip- Tip Top, but we provide all the assem- ment that has already been developed bly and splicing services for steel and by adding automation and e-controls canvas-cable conveyor belts, as well as our own equipment. Since 2018, we How does Metso’s acquisition of have expanded our portfolio of services Outotec change the company? to include hot coating works and shot The merger should achieve extraordi- blasting works for metal surfaces. Tec- nary results in the short run, as it creates nomina offers a wide range of solutions, an industry-leader in supplying mining but we have identified approximately and process equipment globally. Mix- Tecnomina celebrates its 50th anni- 10 to 15 star products: natural rubber ing the different technical expertise will versary in 2020. How has the com- coatings, synthetic rubber coatings, create a tier-one company. Both com- pany evolved in recent years? cold vulcanized glue, tools, pulley lag- panies are Finnish, so potential cultural Tecnomina is a 100% Peruvian com- ging, belt cleaning systems, scrapers challenges that happen during a merg- pany that has been managed by the and everything related to the conveyor er are minimal. ■ Barrio family since 1984. However, the belts. ■

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innovate compared to markets such as of the first digital mine in the world, » Australia or Canada. located in Moquegua, Peru, accord- Marcos Sitech sees the migration of information ing to Carlos Travezaño, CEO of Sie- The final target for companies is to an industrial cloud and the ability to mens Peru. “We are not talking about to have autonomous operations, capture data and transform it into infor- digitized processes working in silos, Wieland Conroy and ABB has a clear road map mation for decision making as the direc- we are talking about total integration,” tion the industry is headed. However, he stated, affirming that digital solu- for that. The first of the steps while the industry goes through the ma- tions are being implemented from the necessary to define this roadmap turing process, Wieland mentioned that engineering conception to operation General Manager is a customer value workshop solutions related to safety and security, and maintenance in all processes and SITECH where we help identify the key such as proximity detection, collision disciplines. “It will allow our customers avoidance sensors, and fatigue moni- to improve productivity, efficiency, reli- points related to the specifics toring tools will be easier to introduce. ability and secure the operations in real of a mine. This is followed by a When envisaging the digital mine, the time based on the fundamentals of data digital maturity assessment. move to cloud based solutions seems analytics, machine learning, IoT and Ar- inevitable, but the path and timeline to tificial Intelligence (AI),” he added. achieve this depends on variables such “The pandemic represents a digital op- How is Sitech working on the adop- slower than in open pit mining, where Could you provide more details on as the size of the company, specifics of portunity for mining operations,” re- tion of new technologies in the mi- mines are larger and global, and opera- the other technology solutions you - Wilson Monteiro, each operation, and market conditions. flected Franco Bulnes, country manager ning sector? tors have bigger budgets. On the other offer? Country Manager – The disruption caused by Covid-19 for Peru and Bolivia at Eaton Electrical Mining companies’ core business is to hand, there are some factors, like the We offer more tangible solutions to is- has shown the industry the benefits of Group, a global company specialized in produce commodities, not to try to fig- political issues (both internal and ex- sues related to safety and security, and Peru, autonomous operations that can be energy management. “Many clients in ure out which technologies they could ternal) , that are slowing down invest- we are working to package all this into ABB operated remotely. “The final target Peru are asking how to move to remote be using – that is where companies like ment. Finally, the economy downturns a whole solution including items such as for companies is to have autonomous operations and what the digital future Sitech fit in. The digital gap is constant- that drive the mining cycles make it cameras, proximity detection and colli- operations, and ABB has a clear road will look like more proactively than be- ly growing, so our job is to try to close tricky defining when to invest: when the sion avoidance sensors, fatigue moni- map for that,” stated Wilson Monteiro, fore.” that gap and prevent it from expanding. metals prices are high, some companies toring tools and others. In this area, « country manager for Peru at ABB, ob- Bulnes explained that digital changes In banking, retail or finance, companies think they do not need the technology there is a fine line between security and serving that many clients are willing to in the energy space are related to gen- are aware that, if they do not go digital as they are doing well. When the prices productivity, so the idea is to convey a remarking that the company had devel- adopt digitalization, but do not know eration, transmission and distribution. right away, they are going to be left are low, you need the technology but message that a more secure operation oped a strategy to implement its Pitram how or where to start. “The first of the For example, the implementation of behind. In mining, it is different; com- you do not have the money to invest in means higher returns. solution remotely without having to go steps necessary to define this roadmap renewable energy on a mine site, such panies do not feel so strongly that way. it. The truth is, the investment is neces- The big challenge for us is to integrate to site. is a customer value workshop where we as solar power, requires an energy stor- Also, labor costs are competitive here sary in both cases. the whole solution and manage real- Interestingly, when it comes to their help identify the key points related to age system that can be controlled and in comparison to other mining coun- time data capturing. If your operators core business, miners are not risk- the specifics of a mine. This is followed monitored digitally. tries like Australia, so the incentive to How has Sitech grown and evolved suffer from fatigue and are getting averse. Mining is an inherently risky by a digital maturity assessment,” he To enable a successful transition to the automatize operations is not so strong. over the past years? sleepy while working, there is a piece business, from the junior community explained, noting that factors such as digital mine, the requisite infrastruc- Thus, our strategy has been to go step In 2018 we doubled the size of the com- of data there. If you do not do anything raising millions of dollars to explore life of mine can greatly impact the di- ture must be developed to support by step, educating customers, finding pany, but growth slowed down in 2019. about it, that data is lost. So, one thing land that is statistically unlikely to be gital strategy that should be put into an integrated grid, elaborated Bulnes, quick win opportunities, and promoting Of course, we have reached a certain is capturing data, and another is con- developed, through to the processes place. concluding: “Mining requires many dif- the right leadership initiatives to gener- size by now, so growth cannot be ex- verting it in information for better deci- involved with extracting ore at altitude, Juan Parra, general manager of Emer- ferent digital solutions, which must be ate an increasing sense of urgency that plosive. On the other hand, our focus sion making. depth, or both. However, by the time a son Automation Solutions’ Peru branch, supported by software. For this soft- will lead to higher adoption rates. Now, has been adjusting to changing mar- mine is ready to go into production, tra- has noticed an encouraging change in ware to function in unison efficiently, we all know that the digital transforma- ket conditions and new challenges we Do you expect more technology in ditional methods are often preferred as business mentality in recent years: “The countries must invest in grids that bol- tion of mines will take place anyways, see: as a solution provider and integra- the underground space as under- operators look to guarantee output for industry is increasingly interested in ster connectivity, as this is the direction so we are also working on establishing tor, we started as a VAR (Value Added ground mining receives larger invest- management and shareholders. For mi- value added technology and especially the industry is headed.” roadmaps for the digitalization and au- Reseller), however, in the last year , we ment? ning companies, deciding which of the in the opportunities for digital transfor- Luis Palenque, president and director tomation journey have been investing and focusing on In Peru, the underground miners are myriad of technologies available on the mation,” observed Parra, continuing: general for the Andean Region at 3M, building the right capabilities in order typically the local, smaller opera- market they should use is not straight- “Instead of integrating technology at an spoke of the popularity of the com- What are customers expecting from to provide information based services. tors that do not have the exposure to forward, and that is where specialized operational level, Peruvian mining is en- pany’s electrical products, as all the new technology? We have been building an industrial technology and best practices that the digital transformation companies, such suring optimization is integrated from processes and infrastructure to do with Some leaders in mining consider that cloud; we believe the market is going larger and global open pit companies as Sitech, come into play. “The digital the project planning stage,” he said, automation have been introduced to the rate of technology adoption should on that direction and we believe it is all do have. As Peru receives more invest- gap is constantly growing, so our job suggesting that operational efficiencies mine sites and plants. “Every project be much faster, but it is important to about information: capturing data and ment for the underground space from is to try to close that gap and prevent and better up time are replacing cost as has its own issues, and we bring those manage expectations, considering transforming it into information for de- large players, we will see more techno- it from expanding,” stated Marcos the main consideration. issues to 3M’s innovation hubs around these efforts take time and require pa- cision making. Of course, this involves a logy coming; we are already seeing that Wieland, Sitech’s general manager, re- One of the global leaders in automation the world so we can create new solu- tience so they can become sustainable. certain cultural change in the industry, to an extent with the expansion of Glen- lating that the competitive labor costs and digitalization is German multina- tions for the market, or adapt our cur- So, the rhythm of adoption varies de- and will take some time. So, we are of- core in Peru’s underground segment in Peru mean local mining companies tional conglomerate, Siemens, which is rent solutions to fit the specific needs of pending on the industry sub-segments: fering other solutions as well. through acquisitions. ■ often do not feel the same incentive to currently working on the development a mine,” he said. ■ adoption in underground mining is

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Can you provide an overview of Siemens’ range of solutions for the Peruvian mining Carlos industry? Our solutions go from complete electrical engineering, automatization and services. We have drives for regular and Gearless Conveyors and Mills, automation with total digital Travezaño integration with COMOS, advanced virtualization and data analytics with Mindsphere, Cybersecurity solutions, and all ranges of smart solutions for medium and low voltage switchgears, switchboards and E-houses. CEO SIEMENS PERÚ What are some of the standout mining projects Siemens is working on in Peru? We are presently working on the development of the first digital mine in the world located in Moquegua, Peru. Siemens has also been a part of developing Las Bambas where we supplied the complete engineering. We also manufactured, delivered and assembled the gearless drive stations and the four gearless mill drives. We have executed the project and installed our products in Toromocho (Chinalco), Antapaccay (Glencore), Antamina and Constancia (Hudbay Minerals). We were responsible for the design, supply of electrical equipment and construction of medium and low voltage energy distribution into the sites by supplying electrical rooms. In addition to that, we developed and provided eight me- dium voltage mobile substations at Cerro Verde. Ampliación Toquepala (Southern Cooper Cooperation) was one of the last projects we worked for, with more than 2,500 square me- ters of electrical rooms of medium and low voltage equipment. We recently provided an electrical room with main medium voltage switchgear in the mine for Quellaveco project.

To what extent is digitalization becoming a reality at mine sites in Peru? Peru is a world leader in digital mining since it will have the first digital mine in the world. We are not talking about digitized processes working in silos, we are talking about total in- tegration from the engineering conception to operation and maintenance in all processes and disciplines. It will allow our customers to improve productivity, efficiency, reliability and secure the operations in real time based on the fundamentals of Data Analytics, Machine Learning, IoT and Artificial Intelligence. ■

What optimization solutions does Emerson offer to Peruvian producers? Emerson’s Plan Web Digital Ecosystem is a package that maximizes industrial efficiencies at Juan various levels of production and can securely implement the Industrial Internet of Things. On a base level, it improves control systems and data collection. DeltaV is our signature Parra Distributed Control System in this segment and it is present on most of Peru’s high-profile operations. Further up, we offer solutions for management and optimization. We contrib- ute to higher reliability and safety in operations through the use of big data analytics and machine learning. The idea is for technology to be prescriptive rather than predictive. Emerson Innovation Center in Santiago is a key element to the company’s business strat- General Manager – Peru egy and is part of our commitment to collaborative partnerships. Emerson’s role is to iden- EMERSON AUTOMATION tify the technology that can solve a client’s specific challenges, which is a joint effort and SOLUTIONS requires an open dialogue.

In your view, what is the priority for operators when it comes to technology services? We are seeing that operational efficiencies and better uptime are replacing cost as the main consideration. This is an encouraging change. The industry is increasingly interested in the value added of technology and especially in the opportunities for digital transforma- tion. Instead of integrating technology at an operational level, Peruvian mining is ensuring optimization is integrated from the project planning stage.

How can Emerson contribute to mines already in production? We go beyond monitoring solutions to ensure efficiency. An operation’s energy balance is crucial and our product line covers aspects of water and electricity as well mineral handling. We perform energy auditing and have processes to improve water consumption in opera- tions. Legislation has become very strict in terms of water management, and we can con- tribute to a company’s compliance needs and prevent business from being interrupted. ■

PERU MINING 2020 106 Industry Explorations GBR • Industry Explorations • PERU MINING 2020

SERVICE PROVIDERS

"The mining industry cannot operate as a fully isolated entity. On top of energy supply, it needs cement, chemical reagents, explosives and many other elements; while the final product, be it concentrate or cathodes, needs to be sent out to the markets. I think we will see a consolidation period whereby mining operators will try to work with less contractors."

- Víctor Gobitz, President, Peruvian Institute of Mining Engineers (IIMP)

Image courtesy of Confipetrol Andina EDITORIAL Global Business Reports Industry Explorations

some of the majors suffered poor re- Drilling sults attributed to cheap drilling. “Our challenge for 2020 is to provide a so- Services phisticated product with frontline tech- nology and highly-trained personnel at low prices,” he reflected, mention- ing the new technologies AK Drilling is developing in liaison with IDS, such as horizontal drilling, deep-pit drilling and automated diamond drilling. “The price is still very important for many customers, however, more au- PRODUCERS AND tomated services with higher safety standards are becoming increasingly JUNIORS LOOK TO popular,” observed Miguel Ángel Are- REBOUND VIA THE nas, general manager of Peruvian drill- ing contractor Geotec, who has also DRILLBIT noticed customers becoming more sophisticated in their requests for new technologies. “An example of this is the directional drilling service Geotec implemented in Peru along with our partner in the US,” he said. Automated drilling equipment is be- coming more commonplace in Peru, particularly with the biggest players in By the beginning of 2020, the down- the industry, such as at the Newmont- turn seemed to be in the mining indus- operated Yanacocha mine where Geo- try’s rear-view mirror and the focus had tec has been using the Epiroc Smart shifted from cost-cutting exercises to rod handling machines. “Although this increasing productivity. Producers were represents a bigger upfront invest- looking to increase reserves through ment, they increase safety and produc- the drillbit and juniors were gearing up tivity significantly,” stated Arenas, who for exploration campaigns. Then Co- explained that the capital investment vid-19 struck and drilling services were is paid back as the machines can drill not deemed essential by the Peruvian during downtime. Expanding on this government – a blow for miners looking theme, Arenas commented that Geotec to create shareholder value, but an even Image courtesy of AK Drilling is working on an artificial intelligence more severe impact for the companies (AI) project to increase production and providing the services. Sastre and Aoife McGrath in the newly The push for automation throughout remove drilling workers from the firing The disruption caused in Q2 2020 has, created positions of vice president ex- the mining services sector has been line, a key focus area for 2020. however, been mitigated by the sharp ploration for Latin America and Asia accelerated by the pandemic, but for Environmental concerns are also high rebound in metals prices from Q3 on- Pacific, and Africa and Middle East, re- the drilling industry, Granda believes on the agenda for mining companies as wards. Initially led by gold and silver, spectively. Barrick boss Mark Bristow technology should be used to improve public scrutiny and stricter regulations base metals recovered with copper said the appointments reflect Barrick’s machine efficiency, rather than to re- require operations to have smaller foot- trading over US$3/lb and zinc over commitment to what it regards as its move human operators. Underlining prints, which has led Geotec to bring US$1.10/lb. By October, juniors such as main growth driver, another positive the importance of human interaction more compact and automated drilling Regulus Resources, Chakana Copper sign for the drilling segment. for matters of safety and quality, he rigs to the market, according to Arenas. and Tinka Resources had the drills turn- AK Drilling works with producers (70% said: “Drilling is an artisanal practice Explaining how Geotec has developed ing, and this was mirrored by the pro- of its business) at brownfield mines and where the human factor goes hand in smaller equipment that cuts water us- ducers looking to increase mine life on with junior explorers (30%), according hand, and therefore we do not believe age and reduces footprint as part of the brownfield sites. “I do not recall having to general manager Jorge Granda, who that 100% automation will be achieved company’s three-year contract with Las a more loaded second half of the year spoke of the differences between the or is recommended.” Bambas, he added: “Since Las Bambas with so many meters to drill,” stated Ig- two segments: “We appreciate work- On the topic of how to price services, has a commitment with the local co- nacio Bustamante, president and CEO ing with junior clients because of their Granda mentioned it would be ambi- mmunities, we had to develop new of Hochschild Mining. agility, and with majors for how they tious to claim that drilling clients are all working strategies to reach the high In August, Barrick Gold announced the support capacitation and safety stan- willing to pay for quality, but the impor- standard of service that they have set appointment of geologists Leandro dards.” tance is starting to be understood after for their project.” ■

PERU MINING 2020 110 Industry Explorations Global Business Reports 111 PERU MINING 2020 INTERVIEW Global Business Reports Industry Explorations INTERVIEW

Miguel Ángel Jorge Arenas Granda

General Manager General Manager GEOTEC AK DRILLING

What are customers currently asking for from drilling hands free technology in water wells, having bought equip- What do you think should be done to stimulate explora- clients because of their agility, and with majors for how they companies? ment manufactured by Canadian company Foremost. There is tion in Peru? supports capacitation and safety standards. Customers are becoming more sophisticated and are request- currently no rod handler that manipulates the pipe, but we are These days, the government and the industry are focused on ing new technologies. An example of this is the directional going to buy a drill that guarantees that the pipe is handled net profit and total revenue, but do not focus on the money Can you elaborate on AK Drilling’s focus on innovation? drilling service Geotec implemented in Peru along with our hands-free. These machines have very high prices, but we are left on the table. Investing in exploration generates a project In 2019, we opened IDS in Chile, AK Drilling’s technology partner in the US. These days, customers are more focused willing to make the investment ourselves rather than passing pipeline, which in turn generates revenue to be used in educa- branch that specializes in drill design. In liaison with IDS, AK on the quality of the products instead of the price. Price is still it on to our clients, because we are committed to constantly tion and social projects. The government needs to see where Drilling is developing new technologies such as horizontal very important for many customers, however more automated improving safety. there is potential and act quickly, because investors are tired drilling, deep-pit drilling and automated diamond drilling. The services with higher safety standards are increasingly popular. of waiting two or three years to know if there really is potential goal is to improve machine efficiency, whilst being conscious There is a need for a smaller footprint in mining projects, which Does Geotec also work with junior mining companies? and cannot continue to invest if they are uncertain there will of the importance of human operators for matters of safety has led Geotec to bring more compact and automated drilling We work with Regulus Resources, performing the drilling pro- be a sufficient or a timely ROI. By losing these opportunities, and quality. Drilling is an artisanal practice where the human rigs to the market. For example, as part of Geotec’s three-year cess of deep wells to help them reach their exploration tar- Peru loses its competitiveness and these funds go to other factor goes hand in hand, and therefore we do not believe that contract with Las Bambas, we have developed smaller equip- gets. We have a very close relationship with Regulus’ CEO, countries. 100% automation will be achieved or is recommended. ment that cuts water usage and reduces footprint. John Black, who invited Geotec to Coimolache because no Permitting must be sped up in order to recover opportunities company has been able to drill as deeply as we do. Although for revenue and business that we are currently leaving on the From the client perspective, are you currently seeing a Peru currently has more open pit operations, but mines our work with Regulus has been successful for both parties, table. Additionally, the investment climate for exploration must bigger focus on quality or price? are starting the transition underground. Have you seen a they are the only junior we currently work with. Geotec has be incentivized to maintain Peru’s dynamism as a jurisdiction. Our challenge for 2020 is to provide a sophisticated product greater demand for underground equipment? strict financial policies, and with many junior companies pay- with frontline technology and highly-trained personnel at low Definitely. Geotec has the Yanacocha contract with the highest ment can be an issue due to a lack of liquidity and cash flow. How would you characterize the Peruvian mining market prices. It would be ambitious to claim that drilling clients are all security and innovation standards in the world. Representa- in 2020? willing to pay for quality. Nevertheless, the importance is start- tives from Newmont Goldcorp came to see Geotec’s drilling Geotec recently signed a contract to work on the Lima Investment during the last three years in Peru has been in ing to be understood, especially after some majors suffered standards, using the Epiroc Smart Rod handling machines, Metro. Can you explain the importance of this project to brownfields rather than exploration. This can be attributed to poor results attributed to cheap drilling. and stated that it is the highest standard they have audited the company? two reasons: permitting and communities. Companies hire AK Drilling for its quality, high safety stan- in recent years. These are smart and fully automated equip- This project is important because we are going to diversify The importance of mining for GDP growth has always been dards with no accidents and production efficiency. We have to ment for drilling. Conventional mine equipment costs around operations to infrastructure even though we have only focused recognized, however it is fitting to point out that the regions look for new ways to ensure efficiency and safety. That starts US$350,000 and smart equipment costs around US$620,000. on mining. The Lima Metro has 17 stations located underwa- that receive cash flow are those with exploration projects. In from the hiring of suitable personnel and machines with the Although this represents a bigger upfront investment, they in- ter, and Geotec has been hired to do the de-watering process, the 1990s with the exploration boom, cash reached small prov- latest technology. crease safety and productivity significantly. which is the same as we do for open pit mining. We drill water inces and stimulated domestic economies. It demonstrated One of the benefits is that the machines can gain time by drill- wells to dry the mine before the drill starts working. We have how exploration can result in a positive chain of development Which areas do you view as having high potential moving ing during downtime. Peruvian mining is not yet prepared to already drilled some pilot wells. Amphos 21 is the company where increased earnings translate to better living standards forward? embrace the machines to work automatically inside the mines. working directly with Lima Metro and Amphos 21 subcontract- and upward mobility. The focus for a country to grow and pros- AK drilling’s operations extend across the continent, cover- Geotec is going to implement approach and instrumentation ed us, a company we have a very strong relationship with. per should be exploration, more so for Peru given its resour- ing five Latin American countries. There are very interesting sensors that allow us to operate in those conditions in 2020. ces. regional opportunities but the company’s strategy begins The device automatically shuts off when the laser barrier is cut. In which areas is Geotec investing in 2020? in-house by strengthening its services. We measure success Geotec is investing in technologies that increase productiv- What is the split between AK Drilling’s work with juniors not by how quickly we can grow but by ensuring excellence of What is Geotec´s safety record and how has technology ity and safety. We seek to target increased production during compared to producers? service and by providing positive results. AK Drilling’s upmost improved security for mining companies? downtime through automation and artificial intelligence (AI), 70% of AK Drilling’s operations are at brownfield mines and priority is repeat business and ensuring that clients feel they Geotec’s safety indexes are excellent and have been improv- and we are currently working on some AI projects to remove 30% are for junior exploration. In comparison to other drilling are being served to the best of our capacity. The company’s ing with a frequency index (FI) of 0.67, a severity index (SI) of drilling workers from the firing line. We are aware that these companies, we have a greater share of business with juniors. motto is to explore the resources of tomorrow to improve the 2.01, and an accident rate (AR) of 0.001 These numbers have investments are not going to have an immediate return of in- Being a drilling company that works with both is interesting quality of life today, a philosophy we would like to see adopted been achieved by implementing hands-free technology. Geo- vestment, but they will allow us to differentiate ourselves from because it allows for synergies – what you learn from one can by all mining stakeholders. At the end of the day, Peruvians are tec will be the first company in Peru and Chile to implement other companies as leaders in the market. ■ be shared with the other. We appreciate working with junior the ones who will benefit the most from the influx of capital. ■

PERU MINING 2020 112 Industry Explorations Global Business Reports 113 PERU MINING 2020 EDITORIAL Global Business Reports Industry Explorations INTERVIEW

What have been the main develop- products, top-quality solutions, cutting- Blasting ments for Orica globally? edge technology and excellent service, Orica’s focus is to have a real customer- allowing us to add more value to our cus- Technologies centric organization, which is also what tomers. we are promoting in Peru. With over 140 With Exsa we share values and principles years of experience and 1,500 blasts per such as commitment to the safety and day, today we continue to be the leaders sustainability of our operations, so our M&A AND INNOVATION in mining and civil blasting. focus continues to be on working safely, TO HELP STAND OUT Locally, we are the number one seller of responsibly and sustainably, ensuring the cyanide, as this is a strong market for pre- well-being of our people and the commu- FROM THE CROWD cious metals, and we have a big market nities where we operate, and consolidat- share in the blasting business as well. ing our position as the strategic partner of From a financial and organizational stand- choice for our customers. The competitive market for blasting ser- point, this is a good split; both businesses vices in Peru is served by both interna- are good and they offer some synergies How important is it to look at the Image courtesy of Gold Fields tional and local explosive companies, for the Peruvian market. blasting process with an ‘end-to-end’ including large players such as Orica, Fa- Caicedo went on to say that the winning Orica’s commitment to offer an ‘end- Alejandro approach? mesa, Enaex and Maxam. So how does players in the medium and long term to-end’ approach. To emphasize Orica’s The Peruvian market is served by large Energy is just one factor; sometimes you a company differentiate itself from the will be those who can provide value and focus on R&D, Caicedo continued: “We international and local explosive com- do not want so much energy because you competition? One way is to buy the com- technology, rather than those that offer have more than 200 technologists and Caicedo panies. What is your positioning in this want to control slope stability; sometimes petition. On February 18th 2020, Orica the lowest price. Giving the example of more than 40 software developers dedi- competitive scenario? you want stronger fragmentation, but you announced it would acquire Exsa, Peru’s Orica’s introduction of the Bulkmaster 7 cated solely to our digital solutions to The market is very competitive and we need to control dilution. What I want to largest manufacturer and distributor of Mobile Manufacturing Unit to a Peruvian optimize the blasting process itself and need to offer good rates; however, in the say is that we look for an integrated solu- industrial explosives, which Orica’s man- mine, Caicedo added: “We are develop- the whole process downstream.” medium and long term those that prevail tion, not simply a product. At Orica, we aging director and CEO Alberto Calde- ing a fully automated blasting process, While Orica is mostly present in open will be who the ones that can provide have an investment that is three times ron stated will immediately establish which considers innovations like Web- pit operations in Peru, the company sees value-added propositions and techno- greater than that of our competitors in Orica as the number one player in Peru. Gen, the world’s first wireless initiating the underground mining segment as a logy to its customers, rather than those R&D. At the same time, we have more General Manager - Peru Alejandro Caicedo, Orica’s general man- system that operates remotely, and Blas- potential area of growth, and Caicedo that offer the lowest prices. For example, than 200 technologists and more than 40 ager in Peru, called the Exsa acquisition tIQ, a cloud-based digital platform de- mentioned that new blasting technolo- ORICA at Orica, we are already introducing the software developers dedicated solely to an “extraordinary opportunity” that re- signed specifically to enable continuous gies can help support safer and more latest technology in Mobile Manufactur- our digital solutions to optimize the blast- inforces its industrial capabilities, supply improvement of blasting outcomes.” efficient operations. “Underground mi- ing Units, Bulkmaster™ 7, to an impor- ing process itself and the whole process chain and market share in Latin America. Discussing how products are developed ning is still done very much in an old- tant customer in Peru, the first advanced downstream. We are competing with our “The merger of both companies gener- in the blasting industry, Caicedo was fashioned manner, so there is an oppor- truck in Latin America, that had only been technological solutions and not only with ates a solid and talented team, a high keen to stress that Orica looks for an tunity to change that without sacrificing » used in Australia. In the same way, we are market-leading commercial explosives. range of products, top-quality solutions, integrated solution rather than simply margins,” he said, before concluding: developing a fully automated blasting Recently we acquired GroundProbe®, cutting-edge technology and excellent a product, citing the company’s acqui- “Indeed, technology improves produc- process, which considers innovations like whose technologies are used to detect service,” he stated. sition of GroundProbe as evidence of tivity and margins.” ■ WebGen™, the world’s first wireless initi- instabilities in real time and predict when When you do not do things ating system that operates remotely and collapse of mines and dams will occur. manually, you generate an BlastIQ™, a cloud-based digital platform enormous amount of data with designed specifically to enable continu- Blasting presents safety risks. What ous improvement of blasting outcomes can be done to remove operators from priceless information in real time, NEW VERSION by integrating data and insights from dig- the line of fire? which will allow you to improve itally connected technologies across the You can remove operators from the line of NOW AVAILABLE every single process. What is drill and blast process. fire by having connectivity and reducing human interactions to the minimum. We going to transform the business Could you comment on the acquisition already have a wireless initiating system is having the tools and the ability of Exsa in February? in Australia with BHP Billiton, for instance. to analyze all that data. This operation represents an extraordi- When you do not do things manually, you nary opportunity for Orica as it reinforces generate an enormous amount of data our industrial capabilities, our supply with priceless information in real time, chain and our position in the Latin Ameri- which will allow you to improve every can market - a region with good growth single process. What is going to trans- prospects. Although we already had a form the business is having the tools and « strong presence, this will be increased the ability to analyze all that data. With thanks to Exsa’s broad customer base, our tools in BlastIQ™ we will address this which is of great interest to us. challenge and allow our customers to The merger of both companies generates monitor from their desks how benches are a solid and talented team, a high range of progressing, hole by hole. ■

PERU MINING 2020 114 Industry Explorations Global Business Reports 115 PERU MINING 2020 EDITORIAL Global Business Reports Industry Explorations INTERVIEW

Miguel Caillaux, Can you summarize the main aspects owners coming in, companies always re- Laboratories of the geo-metallurgical approach at vise their contracts and quality services of Chemicals Jonathan Certimin? their suppliers, and we were happy that & Chemicals MC: In exploration, you typically take we continued to be the best option for In 2019, Melbourne based chemical distributor IXOM began a small samples from many targets and them. At Certimin we have as mission to transformation strategy to focus on its strongest sectors and seg- Campbell & then you need to project the metal- engage in long-term business relation- lurgical parameters, but the scarcity of ships, and this is a good example. R&D INVESTMENT TO IMPROVE HEALTH, ments, according to César Castillo, general manager of IXOM Peru. In Peru, this process involved expansion of some of IXOM’s Luz Blancas core samples makes it difficult to run Additionally, in the second semester of SAFETY AND SUSTAINABILITY business lines, such as mining, which represents 50% of the com- the metallurgical tests. Together with an the year we received the trust to manage pany’s business activity (a figure IXOM envisions will grow to important mining company, we worked the laboratory of the polymetallic mining around 70%). on a project to introduce a technology unit of Cerro Lindo from Nexa Resources. Laboratories Discussing how IXOM involves its mining clients in the R&D pro- MC: General Manager & Director that uses an automated pilot plant that The second factor is related to junior cess when developing its products, Castillo explained that the JC: Deputy General Manager handles small amounts of sample and of- companies. Some of them are reactivat- Laboratories in charge of geochemical analysis consist of larger company tests product performance in terms of a site’s particu- LB: Commercial Manager fers the same quality results, or even bet- ing exploration, thanks to high gold and bases, usually company headquarters located in the capital, as lar geology. “Minerals vary greatly, not only among projects, but CERTIMIN S.A. ter quality results than a large pilot plant copper prices, and the granting of some well as smaller mine site laboratories. In the case of Certimin, often within the same operation,” he said, noting that efficiency because of its sophistication in the mea- important drill permits by the Ministry of the former had to close briefly during lockdown, but the onsite improvements rather than price has been the most important surements of all the parameters. Mines this year. labs remained active, according to general manager and direc- metric for clients. JC: In order to provide solutions for dif- tor, Miguel Caillaux, who remarked that the company had already Regarding the type of mining clients IXOM works with, Castillo ferent types of mineral, we expanded our What is Certimin’s current capacity, recovered to healthy levels of operation and turnover by July. suggested the company was looking to expand its scope: “IX- automated flotation plant and today we and how is the company incorporating Jonathan Campbell, Certimin’s deputy general manager, ex- OM’s mining business partnerships are currently with producers have 24 flotation cells, two vertical re- new technologies and solutions? plained how the company’s geo-metallurgical approach is struc- directly, but we want to increase our outreach to EPC companies grinding mills, two flotation columns and MC: Putting together Certimin’s Lima tured to provide solutions for different types of minerals. “The and contractors too. Partnering with EPC companies brings ad- other complementary equipment. The laboratory and the capacity of our prepa- success of metallurgical tests depends on your capacity to look vantages such as the integration of technology to mine design success of metallurgical tests depends ration facilities in Arequipa, Puno and for new processes and be creative,” he said, noting that after a directly.” on your capacity to look for new process- Cajamarca, we can process 2,000 sam- process has been designed initially, it must be adapted to the The mining industry makes up around 30% of Quimtia’s revenue, es and be creative. You design a process ples daily in Lima. In terms of new tech- mineralogy of the ore. “You need to run some simulations and according to sales manager Eduardo Galdo, who related that first, but then this has to change to adapt nologies, Certimin currently has three change some parameters in order to improve the results, and Quimtia’s mining business had been impacted more heavily than to the mineralogy of the ore. You need to divisions: geochemistry, metallurgy, and then you can scale that up to an industrial volume.” other sectors it works in, such as food, livestock and animal feed, run some simulations and change some environmental, and now we are opening To enable this adaptability, Campbell noted that Certimin has but by August was back to 90% capacity. One of Quimtia’s key MC parameters in order to improve the re- a fourth division for operation support, expanded its automated flotation plant and today has 24 flota- products and technologies for mining is hydrogen peroxide to sults, and then you can scale that up to where we are including new technologies tion cells, two vertical regrinding mills, two flotation columns and eliminate cyanide, and Galdo commented that the company has an industrial volume. that do not necessarily involve laboratory other complementary equipment. accounts with almost all the precious metals mining companies LB: We were the first company in Peru tests. One of our partners has developed Between its central laboratory in Lima and preparation facilities in in Peru, but is now trying to expand into other metals. “We want to integrate metallurgical tests with geo- a series of technologies to measure pa- Arequipa, Puno and Cajamarca, Certimin can process 2,000 sam- to go into base metals too - in the pre-oxidation of the mineral in chemical analysis. The geo-metallurgical rameters continuously online, among ples daily, with three current business divisions: geochemistry, the slurry, once it goes into flotation. We have one or two trials approach also requires that you have a these there is a software for tracing Cov- metallurgy, and environmental. Caillaux revealed that Certimin going on using this technology, to help the client either recover strict sample management from the be- id-19 within the workforce. As part of our is now opening a fourth division for operation support, includ- more product, or to use less cyanide, which is more expensive ginning, so these samples can be con- long-standing relationships with Chilean ing new technologies that do not necessarily involve laboratory than hydrogen peroxide,” he said. served and used in metallurgical tests partners, we are also offering automation tests: “One of our partners has developed a series of technolo- Cyanide is one of the main costs for gold producers, and control- – sometimes several years after drilling. and robotic systems for fuel handling to gies to measure parameters continuously on-line, among these ling the levels used can help lower costs and also reduce environ- In Certimin we have developed spe- mining trucks. Finally, we have partnered there is a software for tracing Covid-19 within the workforce.” mental liability. Swiss company CyanoGuard has developed tech- cial procedures for the storage of these up with Glencore Technology Australia nology that reduces toxic reagent usage and improves precious samples. In this field we have developed and BGRIMM Technology from China metal recoveries, focusing on cyanide detection, monitoring and LB some of the most emblematic projects of who have an active role in scientific re- optimization. “We basically help gold mines improve recover- the country. search and technology development in ies and reduce cyanide usage, saving them money and reducing the field of comprehensive utilization of their environmental footprint,” summarized CyanoGuard CEO, Which contracts have helped mitigate mineral resources. Benedikt Kirchgässler. the effects of the pandemic? JC: In Peru, we are the official labora- In April 2020, CyanoGuard raised US$3 million from a seed LB: There were two factors that helped tory for Glencore’s Technology tests with round led by Wingman Ventures to help initiate pilot projects mitigate the effects of the pandemic. Isamill and Jameson Cells. There are four and expand the digital and artificial intelligence based aspects First, in February we won an important large mining companies that already use of its technology, according to Kirchgässler. Regarding the type contract for mine site laboratories in the these technologies, and as these pene- of savings a gold mining company could expect to make using gold mines: La Arena and Shahuindo, trate the market, we expect an increasing CyanoGuard technology, he replied: “The use of CyanoGuard’s which is a great validation of our work demand for our services. In addition, the technology allows gold mines to reduce their cyanide consump- because since 2010 we have won the partnership with BGRIMM Technology tion by 15-20%. As well as reducing cyanide under-delivery, by bidding processes with three different will give access to our clients to techno- minimizing these times, we can increase gold recovery by about operators: Rio Alto, Tahoe, and now Pan- logical innovations and a wide and di- 2%.” ■ JC American Silver. Whenever you have new verse experience in mineral processing. ■

PERU MINING 2020 116 Industry Explorations Global Business Reports 117 PERU MINING 2020 INTERVIEW Global Business Reports Industry Explorations EDITORIAL

Quimtia works with hydrogen peroxide to eliminate cyanide. Considering the Outsourcing, and liabilities,” said Fernando Martínez Cáceda, general man- Eduardo rising price of metals, is this an area that the company is trying to grow? ager of Avis Perú, who gave the example of companies prefer- This is one of Quimtia’s most important products and technologies. Today, we have ring to rent computers rather than buy new, and the increase in accounts with almost all the precious metals mining companies in Peru, and we want to Transportation & shared office space, as widespread global trends. “The same Galdo maintain this market share. To build upon this, we want to go into base metals too, in trend is evident in the vehicle leasing market,” he added. the pre-oxidation of the mineral in the slurry once it goes into flotation. We have one or Logistics Cáceda mentioned that Avis generally works with mining service two trials going on using this technology to help the client either recover more product, companies, OEMs and contractors, such as SGS, Metso, Epiroc Sales Manager or to use less cyanide, which is more expensive than hydrogen peroxide. The success of any large industrial operation relies on know- and Komatsu, and in recent years this side of the business has QUIMTIA ing where to invest a company’s human resources and know- evolved substantially and now involves more than simply leasing Can you describe the products Quimtia has that relate to tailings, including Wa- ing which ‘non-core’ activities can be outsourced to third party a vehicle. “Today important information and data about the ve- terShed? specialists. In the mining industry, finding mineral reserves and hicle is available, including driving habits of the operator, how to Quimtia sells chemicals that are used in solid liquid separation, which help the tail- extracting them safely, sustainably and efficiently is the core reduce fuel use, reduce the need for maintenance, and minimize ings separate much faster from water, which helps utilize the tailings volume better. business, but the list of processes associated with a successful the risk of accidents.” Quimtia has worked with Ecolab - Nalco to develop their WaterShed business in Peru. mining operation is long. This is where third-party contractors Air travel costs for mining players in Peru are also being re- WaterShed is a technology that increases water recovery while improving deposits and come in. duced, as companies can now share air-services, in part due to increasing the life of a tailings dam. One of the larger players in this sector is Confipetrol, a -com the development of clusters in the south of the country, accord- pany of Colombian origin, but with a large presence in Peru as ing to Luis Fontenoy, general manager of Servicios Aéreos de los How competitive is the chemicals industry from a mining standpoint? well as offices in Bolivia and Argentina, and the intention to ex- Andes (Los Andes). “Clusters allow companies to have capabili- It is a very competitive market. There are two sides to the business – the commod- pand into Chile. With more than 20 years of experience in South ties that they would not have on their own. There are companies ity side, where we try to offer the best price and leverage Quimtia’s strong logistics America and over 4,500 certified employees, Confipetrol offers that need some services, but not in the necessary volume to chain to ensure the products are delivered on time and form. We have partnerships a comprehensive range of services that include maintenance for justify chartering a flight themselves,” he said, adding that shar- with logistics agencies to assist with this both on the purchasing side and the delivery the mining sector. “We usually help clients during opex rather ing services can also dramatically reduce travel time. “Instead of side. The second side is the specialty business, where we try to sell technology rather than during construction, because we take care of their repair taking up to 10 hours to reach the mines, travelling by road, we than products. For this, we offer the client tailor-made solutions that are designed and and maintenance services while an operation is in progress,” ex- can help them cut that time to less than one hour.” tested with the mining companies, working closely together. We review the application plained Wilson Miranda, general manager of Confipetrol Andina One of the main logistical challenges in Peru is the location of the of these chemicals to see how we can continuously improve, working as a consultant (Confipetrol´s Peruvian subsidiary), which has grown 20% annu- mines. The majority are at altitude, in the middle of the moun- rather than a sales person. ■ ally in operation and maintenance (O&M) services. tains, or in areas that often lack infrastructure. “These challenges Having worked with some of the largest players in Peru’s mi- represent opportunities for logistics providers, because compa- ning industry, including Nexa Resources, Yanacocha, Minsur nies need help in navigating and dealing with their peculiari- and Barrick Gold, Miranda suggested that the maintenance of ties,” observed Juan Alonso Checa, Latam director of Noatum equipment, plants, indoor mine equipment and open pit mine Logistics, who cited Quellaveco and Toromocho as examples of equipment is best left to specialized companies which measure complicated projects from a logistical standpoint due to their How important is the mining market for IXOM In Peru? their services through key performance indicators: “That is the location in Ilo. As well as work on the development of Quellave- César Mining makes up 50% of our business activity and we envision this share to grow to best way to focus on finding reserves, exploring and processing co and expansion of Toromocho, Noatum (which acquired MIQ around 70%. The pipeline for new projects in Peru amounts to more than US$50 bi- them,” he concluded. Logistics in 2019), Noatum Logistics has been working on an llion, which speaks to the immense potential for development in the country. We oper- “The trend for outsourcing and renting is evident across all busi- expansion project at Las Bambas and the implementation of the Castillo ate at all levels and have partnerships with small, medium and large-sized operations. ness sectors, as companies continually search to reduce capex copper concentrate transportation system for Mina Justa. ■ Our clients include Hudbay, Gold Fields, MMG Las Bambas, Cerro Verde, Barrick and Antamina, as well as BHP-Escondida, Anglo American, Vale Brasil and Codelco Chile.

Can you elaborate on the company’s focus on innovation? General Manager – Peru Product innovation is IXOM’s priority because it ensures we remain competitive, par- IXOM ticularly with regard to constantly improving the operational efficiency for our mining clients. We have a reliable and proven range of reagents; our offer covers from bulk, solid, packaged, specialized and customized liquids to improve the recovery of miner- alogical species. Thus, we improve productivity in oxide in copper, zinc and precious metals; we have unique products for the extraction of solvents and we also have custom collectors according to the mineral for the concentration of copper. In flotation, we have dispersants, primary and secondary collectors. In water treatment we have flocculants and antifoams, with unique customized products manufactured at our plant in Chile. We are also in the maintenance line with refrigerant gases and coolants. Finally, we also have emulsifiers for explosives. We have a team of engineers dedicated to the development of new operational solu- tions for the mining industry. A recent and important innovation from our team in Peru has been the redesign of a froth flotation reagent, and our mining partner in this en- deavor will facilitate the technological diffusion. This will be launched in Peru in 2020, but will be adaptable to operations worldwide and will be testament to the Peruvian mining industry’s global influence. ■

PERU MINING 2020 118 Industry Explorations Global Business Reports 119 PERU MINING 2020 INTERVIEW Global Business Reports Industry Explorations THOUGHTS

Wilson Miranda

General Manager CONFIPETROL ANDINA THE BENEFITS OF

Image courtesy of Certimin OUTSOURCING

What has been the progress of Confipetrol Andina in the Which of Confipetrol’s services are helping the business The trend for outsourcing and renting is evident across all business sectors, as mining industry in the last year? grow in Peru and Latin America? companies continually search to reduce capex and liabilities. For instance, these days Confipetrol Andina (Confipetrol´s Peruvian subsidiary) has Third party services in operation and maintenance of concen- grown 20% annually in operation and maintenance services. trator plants, open pit equipment, fleet maintenance and un- companies do not buy new computers, and office space is also frequently rented We do maintenance services for the mining sector, but also for derground mine equipment are all driving growth for the com- or shared. The same trend is evident in the vehicle leasing market. Being able to the oil, gas and energy sector. The mining industry represents pany. Confipetrol is looking to expand its services. We have monitor vehicle condition is particularly important for those working in the Peruvian 60% of overall sales annually. opened offices in Chile and have participated in several ten- mining industry, as sites are usually set in rugged terrain. Among our main clients, we have participated in Nexa Re- ders because we conducted a commercial survey to identify sources’ projects such as Pasco Mining complex, Atacocha, business opportunities. Customers verified that we have the El Porvenir and Cerro Lindo, where we provide service and requisite skills to be able to participate in large tenders, and - Fernando Martínez Cáceda, maintenance for their equipment. We are also working with we are eager to be involved in more projects in 2020 through- General Manager, Yamacocha in the maintenance of its plants, with Minsur in out Latin America. We are currently working on an important Avis Perú equipment maintenance, and with Barrick Gold at Lagunas project in Chile that we are handling from Peru due to the ex- Norte, among others. pertise we have here. Chileans and Argentines value Peruvian mining expertise highly, which makes Confipetrol very com- How does Confipetrol maintain high safety standards? petitive in the market. Further north, there is a lot of potential Safety is at the core of Confipetrol’s business. We have de- in Ecuador, and we will participate in Ecuador’s Mining Sum- Mining clusters allow companies to have capabilities that they would not have on veloped a behavior-based management system to make sure mit in 2020 to identify business opportunities in this region. their own. There are companies that need some services, but not in the necessary that employees have a proactive attitude with regard to safe- volume to justify chartering a flight themselves. Los Andes sharing services can ty, take care of themselves, and carry out thorough risk as- What can mining companies do to change the negative dramatically reduce travel time. Instead of taking up to 10 hours to reach the mines, sessments and identification of hazards. Confipetrol’s workers public perception of the mining sector? travelling by road, we can help them cut that time sometimes to less than one hour. use all the necessary management tools so that they can work Large mining companies work hard at looking after the co- safely and minimize the risks of an accident. These manage- mmunities where they operate. Receiving permits in Peru can ment systems have allowed Confipetrol to sharpen its focus be a lengthy process, but the government is already working - Luis Fontenoy, on safety and security, our main operational priority. Further- on trying to reduce those times. I was in a meeting with the General Manager, more, Confipetrol has received the ISO 9001 certificate for Minister of Economy recently, and the government appears Servicios Aéreos de los Andes quality, ISO 14001 for environment and ISO/IEC 18001 for keen to help resource development in the country. Regarding safety. social issues, the negative outlook is a global phenomenon. There must be a joint effort between the State, the private How can third party service providers help companies fo- companies and the affected communities to solve the prob- The main logistical challenge in Peru is the location of the mines. The majority are at cus on their core business? lems. Proactive measures should be taken instead of reactive Companies are looking for specialists that allow them to solve ones. altitude, in the middle of the mountains, or in areas with complicated access, often their main problems so they can focus on their core business in places lacking infrastructure. Toromocho and Quellaveco are a particular challenge – finding reserves and extracting them safely, sustainably and What are Confipetrol´s main goals and objectives in the since they are located in Ilo, which is not one of the most developed ports in Peru. properly. Maintenance of equipment, plants, indoor mine mining sector for the next two years? These challenges represent opportunities for logistics providers, because companies equipment and open pit mine equipment is left to specialized Confipetrol wants to be the first choice for customers in op- need help in navigating and dealing with their peculiarities. companies that measure the service they are having through eration and maintenance services. We want mining companies KPIs. That is the best way to focus on finding reserves, ex- to see us as the main operation and maintenance contractor ploring and processing them. We usually help them during that will solve your problems with high quality standards, - Juan Alonso Checa, opex rather than during construction, because we take care safety and environmentally friendly actions. We always ensure Latam Director, of their repair and maintenance services while an operation high reliability of equipment and availability at a fair cost with Noatum Logistics is in progress. the highest possible standards. ■

PERU MINING 2020 120 Industry Explorations Global Business Reports 121 PERU MINING 2020 COMPANY DIRECTORY Global Business Reports Industry Explorations COMPANY DIRECTORY

3M CERRO VERDE 3m.com.pe cerroverde.pe

ABB CERRO DE PASCO new.abb.com/south-america pascoresources.com

ACEROS CHILCA CERTIMIN aceroschilca.com certimin.pe

AESA CHAKANA COPPER aesa.com.pe chakanacopper.com

AK DRILLING CONFIPETROL akdrillinginternational.com confipetrol.com

AMC CONSULTANTS DENTONS amcconsultants.com dentons.com

AMPHOS 21 DIVEMOTOR amphos21.com divemotor.com

ANDDES DSI anddes.com dsi-peru.com

ANDRITZ EATON andritz.com eaton.com.pe

ANGLO AMERICAN ELORO RESOURCES peru.angloamerican.com elororesources.com

ANTAMINA EMERSON antamina.com emerson.com

ARCADIS ENVPHYS arcadis.com envphys.com

ATLAS COPCO EPIROC atlascopco.com epiroc.com.pe

AUSENCO EY ausenco.com ey.com/pe/es/home

AUSTIN ESTUDIO RUBIO LEGUÍA NORMAN austineng.com.au rubio.pe

AUSTRALIA PERU CHAMBER OF COMMERCE FERREYROS apcci.org ferreyros.com.pe

AVIS FTI CONSULTING avis.com.pe www.fticonsulting-latam.com

BARRICK GLOBETROTTERS RESOURCE GROUP barrick.com globetrottersresources.ca

BEAR CREEK MINING GOLD FIELDS bearcreekmining.com goldfields.com.pe

BOLSA DE VALORES DE LIMA (BVL) HANNAN METALS bvl.com.pe hannanmetals.com

BOSCH REXROTH HATCH boschrexroth.com/es/pe/ hatch.com

BUENAVENTURA HOCHSCHILD MINING buenaventura.com hochschildmining.com

BISA HUDBAY MINERALS bisa.com.pe hudbayminerals.com

BYRNECUT OFFSHORE IIMP – INSTITUTO DE INGENIEROS DE MINAS DEL PERÚ byrnecutoffshore.com iimp.org.pe

CÁMARA DE COMERCIO CANADA-PERÚ INCIMMET canadaperu.org incimmet.com

CAMINO MINERALS INGENIERÍA Y CONSTRUCCIÓN SIGDO KOPPERS caminominerals.com icsk.com

C3 METALS IPESA www.c3metals.com ipesa.com.pe

PERU MINING 2020 122 Industry Explorations Global Business Reports 123 PERU MINING 2020 COMPANY DIRECTORY Global Business Reports Industry Explorations COMPANY DIRECTORY

IXOM PUCARA GOLD ixom.com pucara.ca

JH FLETCHER PUTZMEISTER jhfletcher.com putzmeister.com

KAESER COMPRESORES QUIMTIA pe.kaeser.com quimtia.com

KEYPRO REGULUS RESOURCES keyproingenieria.com regulusresources.com

KLOHN CRIPPEN BERGER RESEMIN klohn.pe resemin.com

Tipografía: Gotham HTF KOMATSU MINING CORP. SANTA BARBARA CONSULTANTS ROBOCON Color: Negro 100% komatsu.pe santabarbaraconsultants.com Tipografía: Avenir Next SHOTCRETE SOLUTIONS Color: Negro 60% KOMATSU MITSUI MAQUINARIAS DEL PERU (KMMP) SCANIA kmmp.com.pe scania.com/pe Colores: C 0 M 99 Y 76 K 0 C 0 M 0 Y 0 K 100 ROBOCON Pantone 185c KUYA SILVER SERVICIOS AÉREOS DE LOS ANDES SHOTCRETE SOLUTIONS kuyasilver.com losandescorp.com

LIEBHERR SIEMENS liebherr.com siemens.com/pe/es/home.html

MACCAFERRI SIERRA METALS maccaferri.com sierrametals.com

MARTIN ENGINEERING SITECH martin-eng.pe sitech.com.pe

MAS ERRAZURIZ SK RENTAL maserrazuriz.cl skrental.com

METAL TÉCNICA SNC-LAVALIN metaltecnica.com.pe snclavalin.com

METSO SNMPE – SOCIEDAD NACIONAL DE MINERÍA, PETRÓLEO Y ENERGÍA metso.com snmpe.org.pe

MICROMINE SOUTHERN COPPER micromine.com southernperu.com

MINETELL SOUTHERN PEAKS MINING minetell.ca southernpeaksmining.com

MINING PLUS SRK CONSULTING mining-plus.com srk.com

MINISTERIO DE ENERGÍA Y MINAS STANTEC minem.gob.pe stantec.com

MIQ LOGISTICS (NOATUM) STRACON miq.com stracon.com

MISKI MAYO TECNOMINA miskimayo.com tecnomina.pe

MMG LAS BAMBAS TINKA RESOURCES lasbambas.com tinkaresources.com

NEXA RESOURCES TMX GROUP nexaresources.com tmx.com

NORMET VICEVERSA CONSULTING normet.com viceversaconsulting.com

ORICA VOLVO orica.com volvotrucks.pe

PALAMINA WEIR MINERALS palamina.com global.weir/peru

PANORO MINERALS WOOD panoro.com woodplc.com

PEVOEX CONTRATISTAS WSP pevoex.com.pe wsp.com

PLATEAU ENERGY METALS This list intends to include just a representative sample of companies operating in Peru's mining sector, plateauenergymetals.com and as such it should not be considered a guide to take investment decisions.

PERU MINING 2020 124 Industry Explorations Global Business Reports 125 PERU MINING 2020 CREDITS Global Business Reports

EDITORIAL AND MANAGEMENT TEAM

Executive Director: Alfonso Tejerina ([email protected]) Senior Project Director: Ben Cherrington ([email protected]) Reporters: Alfonso Tejerina, Ben Cherrington Project Coordinators: Margarita Todorova ([email protected]), Mariolga Guyon ([email protected]), Lucrezia Falcidia ([email protected])

Executive Editor: Mungo Smith ([email protected]) Operations Director: Miguel Pérez-Solero ([email protected]) Graphic designer: Gonzalo Da Cunha ([email protected]) Graphic designer (ads): Ozgür & Deniz ([email protected]) Graphic designer (GBR corporate materials): Inanç Duman ([email protected]) General Manager: Alfonso Tejerina

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THANK YOU

We would like to thank all the executives and authorities that took the time to meet with us.

Also, special thanks to:

CHAMBER OF COMMERCE CANADA-PERU canadaperu.org

PERUVIAN INSTITUTE OF MINING ENGINEERS (IIMP) iimp.org.pe

NATIONAL SOCIETY OF MINING, PETROLEUM AND ENERGY (SNMPE) snmpe.org.pe

AUSTRALIA PERU CHAMBER OF COMMERCE apcci.org

PERU MINING 2020 126 Industry Explorations