Corporate Social Responsibility in the Peruvian Mining Industry Milpo s experience. Lima, September 2016 Q & A

Transcription

1 Corporate Social Responsibility in the Peruvian Mining Industry Milpo s experience Lima, September 2016 Q & A

2 VOTORANTIM METAIS Our key knowledge as a Peruvian mining company has been complemented since 2010 with alliance to a Brazilian industrial group with global activities over 95 years of history VOTORANTIM NUEVOS NEGOCIOS 80% Votorantim Industrial Votorantim Finanzas Cementos Metales Acero Pulpa Energía 50% Largest non-ferrous metals company in Brazil 21 operating units 690 thousand metric tons of zinc produced 366 thousand tons of aluminium produced 41 thousand tons of copper produced 80% 2

3 VMH PRESENCE (Zinc/Copper) Atacocha Morro Agudo Cajamarquilla El Porvenir Vazante Três Marias Cerro Lindo PERÚ BRASIL Juiz de Fora Smelter Unit Mine Unite Concentrates (*) (kt) Electrolytic Zinc (kt) (*) Includes zinc, lead and copper concentrate 3

4 VOTORANTIM - MILPO 80% In Perú: 3 rd largest zinc producer 3 rd largest lead producer 5 th largest silver producer Cerro Lindo El Porvenir Atacocha Located in Chincha, Ica Treatment capacity: 20k tpd Life of mine: 7 years (Reserves) and 13 years (Reserves + Resources*) Cash Cost 2015: US$/t 28.2 Located in Pasco Treatment capacity: 6.5k tpd Life of mine: 11 years (Reserves) and 16 years (Reserves + Resources*) Cash Cost 2015: US$/t 40.0 Located in Pasco Treatment capacity: 4.5k tpd Life of mine: 7 years (Reserves) and 13 years (Reserves + Resources*) Cash Cost 2015: US$/t 47.7 Cerro Lindo represents 62% of Milpo s revenues in 2Q16 (*) Without inferred resources Pasco Complex Pasco Complex represents 38% of Milpo s revenues in 2Q16 4

5 Milpo s results and growth are sustained on a 5-pillar strategy Sustainability Focused on productivity Mining Operations and Brownfields I Increase productivity and ore treatment capacity Corporate Office II Provide strategic services to the entire organization Copper Projects A) Safety and health B) Environment C) Social Responsibility and Reputation D) People III Design a scheme of progressive growth with lower initial capex Polymetallic Projects IV Design a scheme of progressive growth with lower initial capex M&A V Seek opportunities to create synergies with current operations Continuous focus on improving safety and environmental standards, social responsibility practices and employee s capabilities Focused on a leaner organization Focused on growth Pillar I Pasco Complex (El Porvenir and Atacocha): The operational integration continues with the 3 rd stage (new energy transmission line 138Kv for both processing plants) which has been completed and its operation is expected to begin in the following days. The 4 th stage will be El Porvenir s underground mine deepening expected for 2017/2018 Cerro Lindo: The operation is now focused on the Project to increase capacity to 20k tpd which is in progress. Pillar II The corporate office continues to improve capabilities focused as a strategic service provider Pillar III/IV Magistral Final phase of the EIA s approval (30k tpd) Feasibility study approved (10k tpd) with positive economics using long term prices scenario. Pillar V Michiquillay Milpo submitted a private initiative for the option to buy Michiquillay Copper project. Now, we are awaiting the definition of next steps. 5

6 Diversified and extended Projects Portfolio to grow which could be Milpo s future operating units COPPER PROJECTS BONGARÁ PERU MANAUS POLYMETALLIC PROJECTS Magistral (Copper Open Pit) Located in Ancash - Perú Resources: 227Mt (Cu, Mo) 0.56% Cu, 0.05% Mo Feasibility study approved (10ktpd) MAGISTRAL TRUJILLO HILARION ATACOCHA BRASIL PORTO VELHO ARIPUANA Aripuanã (Polymetallic Underground) Located in Mato Grosso Brazil Resources: 46Mt (Zn, Pb, Ag) 3.9% Zn, 1.4% Pb, 0.3% Cu, 34.8g/t Ag Engeneering study in progress Pukaqaqa (Copper Open Pit) Located in Huancavelica Perú Resources: 273Mt (Cu, Au) 0.49% Cu, 0.08 g/t Au EIA approved 30ktpd Chapi (Copper Open Pit) Copper Cathodes Resources: 44Mt (Cu) Currently defining next steps CERRO LINDO PACIFIC OCEAN LIMA EL PORVENIR CHAPI SHALIPAYCO PUKAQAQA AREQUIPA Shalipayco (Polymetallic Underground) Located in Junin Perú Resources: 20Mt (Zn, Pb, Ag) 5.63% Zn, 0.49% Pb, 39.3g/t Ag Prefeasibility for 3ktdp Hilarión (Polymetallic Underground) Located in Ancash - Perú Resources: 52Mt (Zn, Pb, Ag) 4.53% Zn, 0.70% Pb, 1.01opt Ag Design of a 5ktpd capacity Iván (Copper Open Pit) Copper Cathodes Resources: 25Mt (Cu) Currently defining next steps Operation Units Greenfields Copper Proj. Greenfields Polymetallic IVAN ANTOFAGASTA CHILE Bongará (Polymetallic Underground) Located in Amazonas- Perú Resources: 13Mt (Zn, Pb, Ag) 9.9% Zn, 1.05% Pb, 13.03g/t Ag Road construction in progress Milpo is focused on reducing the risk associated with its development executing these projects by stages in order to reduce the initial CAPEX and to achieve an early start up reducing the payback period, the same model that we applied for Cerro Lindo. 6

7 Land Acquisition Challenges (A difference along the country) BRASIL PERU CHILE Country Types of property Purchase strategy Perú Community Lands Collective negotiations involve a social agreement Brasil Individual Lands Direct negotiation with owners Chile State Lands Negotiation with national government 7

8 In Perú, the social aspects for a new mining project is a key factor for success MINING PERU MAINLY INTERVENTION HIGH ANDEAN REGION High Andean Region HDI: 0.35 PERU Jungle Region HDI: 0.40 GAPS: INFRASTRUCTURE SERVICES Some examples of current social intervention (good practices but not enough) Educational and social infrastructure (hospitals/schools) Improvement of local productive projects (agriculture/farming) Employment during construction period However, communities expectations are higher What companies can do? Sustainable Employment Generation COMMUNITY- OWNED ENTERPRISE Urban Areas HDI: 0.60 PACIFIC OCEAN HDI Categories: HDI> 0.80 high HD : 0.60 medium HDI : 0.35 low HDI : low HUMAN CAPITAL COMMUNITY-OWNED ENTERPRISE: Law: Rural Communities N (exception of income taxes) Only one enterprise for the rural community Progressive benefits for rural community members: 1. Early stage - (low productivity) 2. Intermediate stage - Training effort (increase of productivity) 3. Mature stage - Complex activities / part of the main production chain (high productivity) HDI: Human Development Index,2014 Source: Peruvian Institute of Economy (IPE) URBAN AREAS 8

9 Local Development Strategy 1 Communal enterprise (Contractors of specific services into the mining production activities) Ex. Yarusyacán 4 Public Investments by corporate taxes I x T SUSTAINABLE DEVELOPMENT 2 Strategic alliances and partnerships (Suppliers of specific services based on their capabilities Transportation, hotels ) 3 Strategic investment Education Health Agriculture improvement 9

10 ECOSERMY Empresa Comunal Servicios Múltiples Yarusyacán 10

11 CERRO LINDO Social Responsibility HUMAN DEVELOPMENT Education Program 285 students Job training (CETEMIN and SENCICO) 114 persons Nutritional Program (- 2% malnutrition /year) ECONOMIC DEVELOPMENT LIMA Sierra Productiva 100 families Strengthening : Production Chains 350 families Local initiatives/ventures 850 persons Local suppliers 10 companies INFRASTRUCTURE ICA Water and Sanitation Projects Chavín and Villasol 650 families Energy Projects Topará Concón and Chavín - Hongos 998 families Roads Projects: 1264 families Huirpina roads Chavín and Topará - Chincha IRRIGATION Cerro Lindo (500 ha) ASurface under negotiation (987ha) Ore Bodies Chavín Community 72,456 ha 3,500 persons Topará Mechanized irrigation 176 has Construction of reservoirs 80 reservoirs Afforestation has 11

12 Communal Enterprise as a Shared Value Project OUR PROPOSAL: Implementation and strengthening of the communal enterprise in order to incorporate them as part of the operation s supply chain. By this, partnership will extend across the value chain. The seed capital for the community enterprise will proceed from the economic compensation of the land acquisition process. OBJECTIVES: To develop sustainable, long term employment. To strengthen communal organization. To facilitate access to new opportunities of social and economic contexts. To promote the long-term sustainability of the communal enterprise. 12

13 Mining Company - Rural Community (Create and keep on confidence) MILPO S VALUES AND BELIEFS RURAL COMMUNITY RESPECT Respect for people and willingness to understand HUMILITY ETHICS Act in a responsible and transparent way TRUST TRANSPARENCY OPEN DIALOGUE We believe that a trust environment promotes open dialogue and freedom to speak up and be heard, where diverse opinions build better solutions. DIRECT CONTACT EMPATHY SUSTAINABILITY Seeking sustainable growth with value creation. SUSTAINABLE DEVELOPMENT 13

14 Victo Gobitz CEO General Manager 14