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Managing Risk to Drive Value

Mining Journal Inteligence 2021

By Peter Kukielski


Mining is a complex and inherently dangerous business, and a highly visible one. Extracting minerals from the earth has always presented challenges, many of which remain; however, most of these challenges lend themselves to risk management and mitigation.


The increasing scrutiny faced by miners to ensure compliance with variable jurisdictional environmental, social and governance parameters can be challenging. But rather than lamenting that our industry is held under a spotlight, we ought to see this as an opportunity to demonstrate our right to operate. We are providing the materials required to arrest climate change and to support a sustainable future. So, the onus is on us to demonstrate that we can both mitigate our disturbance and achieve overwhelmingly positive holistic outcomes to drive value for many stakeholders.


At Hudbay, there are three key areas of focus: building deep relationships with our partners; investing in the right technology to maintain efficient and safe operations; and keeping a sustainable future top-of-mind. These elements help minimise operating risks while strengthening our social licence, which is vital if we are to continue to create long-term, sustainable value from our operations.


On the face of it, challenges like evolving social and political dynamics, remote regions with complex supply chains and the need to be sustainable can be daunting; however, in these challenges lies the opportunity to make people’s lives materially better without compromising local value sets. The mining sector, by its nature, is designed to be adaptable to local environments, which also means we have a responsibility to be a strong partner with our communities.


Our goal is to have a positive impact and help local communities near our operations thrive throughout the life of a mine and beyond. We seek to partner and collaborate with our communities to improve their quality of life. For example, in 2020, we collaborated with organisations in Peru to stimulate the local economy near our Constancia mine by creating a new mask manufacturing business operated by women from the local communities. The timing of this project was critical as the communities were facing the extreme challenges posed by the COVID-19 pandemic.

The arrival of the pandemic demonstrated that not all risk is foreseeable. Yet, it is how we adapt to challenges that matters – how we find new, better ways to operate in a dynamic environment presenting supply chain and health and safety risks. Through careful risk management, maintaining open dialogue with local health authorities, and acting transparently with our workforce, communities, and partners, we have further strengthened our social licence to operate.


We were able to effectively manage our way through the pandemic and limit the impact to our operations in both Peru and Manitoba through the actions taken and protocols put in place. This was extremely important given a meaningful portion of our workforce comes from our local communities, and therefore, by focusing on continuing to safely operate, we have been able to ensure sustained employment while preventing the spread of the virus in our workplace and communities.


The pandemic also demonstrated the value of supply chain management as many businesses were impacted by supply shortages and delivery delays. We evaluated looming supply chain risks and executed alternative plans to source key supplies, both for the business and for the sustainability of our communities. In Peru, we focused on identifying the communities’ most pressing needs, which resulted in the procurement and delivery of critical supplies and health equipment, such as basic food necessities, oxygen tanks, masks, and  thermometers.


To help us manage operating risk, it is incumbent upon us to constantly find better ways of operating to ensure the safety of our workforce and more efficient means of production.


Leveraging new technology is a key element o our ongoing commitment to optimisation. At our Constancia mine in Peru, we have been working with MineSense to evaluate sensor-based ore sorting technologies, which is expected to improve the productivity of the processing plant with higher output and lower operating costs, resulting in improved cash flows. In our Manitoba operations, we have used Mobilaris Short Interval Control Software for real-time fleet management, improving efficiency and safety and reducing capacity bottlenecks.


The importance of strong partnerships and technology for our industry might seem well-established and, indeed, obvious. However, there is another element that must be part of the equation to ensure the acceptability of mining as an industry fit for the future – and that is sustainability.


Hudbay has a long and deeply held commitment to sustainable mining. It’s not only the right thing to do; it is our firm belief that sustainable practices make business sense. They are not a cost; they are value-creating for our stakeholders from communities, to governments, to employees, to investors. For this reason, sustainability considerations are embedded in every decision we make as a company.


As an example, we are continuously focused on identifying eco-efficiency measures at our operations. We recently identified the opportunity to modify the water pumps at our stall mill in Manitoba by installing new equipment to adjust the water flow rates to meet processing demands. This resulted in an 18% reduction in freshwater consumption at the mill, thereby lowering the impact on natural resources and reducing the amount of chemicals and reagents need to treat process water.


Mining needs to prove how we are minimising risks our communities – local and global – may face in the future. By thinking sustainably, we can maintain a strong social licence to operate and better define the value we can offer. Because it is this – value – that is at the centre of it all.


When we think about risk at Hudbay, we see it as a chance to do things better. Creating a safer workplace, implementing technology efficiencies, maintaining strong partnerships, and leaving the communities in which we work better than we found them – these actions benefit all our stakeholders in the long run.


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