Hudbay has a long, proven history of successfully exploring and developing new mines, and our Constancia operation in Peru demonstrates our best-in-class approach. Constancia’s timeline from feasibility (determining if the mineral resource can be mined economically) to first production and the ramp-up to full, steady-state production was the fastest among recent, similar-sized projects. Constancia is also the lowest cost copper mine in South America.
Reaching commercial production in December 2015, Constancia was a greenfield project in a new jurisdiction for Hudbay. One of the biggest challenges in developing the mine was a cultural one, and Hudbay was committed to learning about the language and values of the Peruvian people and integrating the operation into its culture. By acting honestly, ethically and transparently with government officials and nearby communities, Hudbay has built strong, positive relationships.
Expanding Operations through Exploration
Constancia is in an area that is highly prospective for copper, and through continued exploration activities led by Hudbay’s exploration team, we have identified opportunities to maintain the operation’s efficiencies and potentially extend Constancia’s mine life.
The Pampacancha deposit is a small, high-grade orebody located only four kilometres from the Constancia mill. Because Constancia is a porphyry copper deposit, ore grades will likely decline as we mine deeper. However, Pampacancha’s high grades will allow us to improve the grade feeding the mill and maintain grades at Constancia for around five years.
Our exploration team also believes the land around Constancia has the potential for several deposits like Pampacancha’s that would continue to improve the grade of the mill feed once mining of Pampacancha is complete. As an important step in consolidating the land package around Constancia, in early 2018 we acquired the minerals rights to approximately 10,000 hectares of property. These properties have a high probability of hosting a mineral deposit and are located within 10 kilometres of Constancia.
Reaching Agreements with the Communities That Own the Land
While Hudbay has purchased the mineral rights to Pampacancha and the properties to the north of Constancia, the communities own the surface rights. Before we can do any exploratory drilling on the new properties, we have to obtain an exploration permit and a drill permit. In Peru, we cannot apply for a drill permit until we have completed archaeological studies (to identify any native artifacts and/or sites) and an environmental impact statement for the purpose of exploration work. And we cannot conduct the fieldwork for the studies until we have a community agreement in place.
We have a history of being fair and ensuring that communities participate in the benefits from the mining of their land. Since 2012, we have reached more than 90 agreements with the local governments and communities near Constancia. These agreements include commitments related to employment and business opportunities and investments in programs (including health, education, infrastructure and socio-economic initiatives) that the community has identified as a priority.
With regards to the newly acquired exploration properties, we already have a land access agreement in place with one of the communities and expect to be drilling one of the targets in 2020. Negotiations with the other communities continue to advance.