“The coronavirus pandemic is presenting opportunities to introduce change at a faster pace. As social distancing becomes a necessity, we will see a bigger push for automation and tele-remote operation.”

Gianflavio Carozzi

CEO, AESA

September 15, 2020

How was business in 2019 for AESA and where are you seeing demand coming from?

2019 was a very good year for AESA as we reached record sales, starting new projects as well as important ramp ups on existing projects. We have primarily been working with mid-sized and large underground mining operations, but two years ago the company started working with open pit operations as they were beginning to transition to underground. Big mining in Peru tends to be open pit operations more than underground, with a few exceptions. We envision that there will be a transition from open pit to underground as it becomes much more expensive to extend the mine life on these operations as open pit.

We are seeing some migration already, for example with Yanacocha. At Yanacocha we have completed our fourth underground exploration project, which should migrate into production in the short term. The next step will be a large sulphides project which will significantly extend Yanacocha’s mine life.

Can you explain how AESA’s innovative approach to training helps increase and develop talent?

In 2019, AESA started a journey to restructure the way we train our employees in terms of safety and hard and soft skills. We focused on the delivery of our policies and standards, the training experience of the employee and developing training solutions which are unavailable in the market.

We took a new look at safety and decided to reshape our policies, standards and procedures in order to address a reality in Peru: low reading comprehension rates as a result of which you cannot just assume that your policies, procedures and training material are going to be well understood. We thus decided to use alternative methods of delivery, particularly a bigger use of visual aids. As such, we started the use of comics and animated videos to inform on critical aspects of safety. We are measuring the results, but using innovative means to transfer critical information has increased the level of understanding.  

AESA has also had a focus on developing hard and soft skills. The mining subcontractor business has a higher level of attrition than what you would find in general, and has difficulty to attract new talent and the labor found has low levels of technical skills (almost entirely empirically gained). This means that we need to be able to develop, identify and retain talent. The company thus created an Operator Academy at AESA where we train operators for different types of equipment in order to provide a technical and practical toolset for current operators for becoming multi-equipment operators or increase skills in the equipment they currently handle. We are building a career path for operators with clear goals and skills that will allow them to understand development options. We also started a Dual Formation Program which is aimed at developing people who have no skills in mining (local communities) and training them to become an operator assistant. To implement the program, we first had to change legislation. Today we have our first promotion currently undergoing training in a program developed by us and sponsored by Nexa (Cerro Lindo) as a strategic partner.

In addition, we evaluated the journey of our workforce through the different training materials and methods employed, and identified an opportunity for improvement. As such, we developed an immersive experience with the use of Virtual Reality in order to identify true levels of knowledge and understanding regarding the operation of three different families of equipment, and to give a better experience to candidates that have no prior mining experience. It helps us evaluate knowledge regarding the use of equipment as well as safety behavior when near or operating an equipment.

How did AESA manage to change legislation to create the Dual Formation program?

Changing legislation was a two-year process and we had to work closely with the Ministry of Education. The aim was to generate conditions that would allow us to create a program that combines on-the-field training with traditional training in classroom, and also being part of AESA as an apprentice since the first day of the career. This type of program develops employable skills in communities that have very few opportunities. This program is an important tool for upskilling and empowering communities. The Dual Formation program is a 1-year program consisting of both theoretical and practical training, and after graduation, the students are incorporated into AESA’s staff. The first program was launched in 2019 and we have very high expectations moving forward.        

How can technologies in an underground mine setting help mitigate safety risks?

Some of the main risks in underground mining where technologies can be of help are falling rock events, gases, interaction between machines and people, flooding and those associated with the use of explosives. The adoption rate of embracing new technologies is still slow in underground mining in Peru, but is definitely increasing.

In order to implement technologies, a certain level of infrastructure is needed in the mine. It is also important to give attention to the skills required for operators to be able to work with the technology. To this end, we are seeing customers starting to make important moves in the direction of infrastructure development and changing management to create the right climate for innovative technologies to be incorporated into mines.

AESA is part of the Breca Group. How does this give the company an advantage over its competitors?

Being part of the Breca group puts AESA in a unique position. On the financial side, the company has significant strength to make substantial investments based on our customer needs. Also, the group has its own mining operations and, as a result, the way in which we view the business is not the same way in which a subcontractor would regularly look at it. We are the first line of defense for our customers and place significant focus on making sure that operations are run efficiently and safely. Our main focus is “the mine” and as such, our capabilities are built around being able to deliver quality, safety and productivity.

How does AESA plan to build on its success in 2020?

AESA is working not only on improving the operations that we currently have, but also increasing our service offering to control the entire cycle. The more services in the cycle that we can control, the greater the productivity that we can offer to our customers. We have identified new customer targets and we also want to have a bigger footprint within our customers to address their needs more efficiently.

We are also conscious about the degradation of our planet, therefore we are pursuing environmental care and protection actions by measuring and controlling our operational impact. We have started by measuring our carbon and water footprint, and will follow with measures to reduce the impact on the environment.

How has AESA been affected by the COVID-19 outbreak, and what actions is the company taking in response?

We have been impacted by a significant but temporary reduction in revenues and the need to implement remote work immediately. However, we were prepared and therefore sending everyone home to work did not disrupt us that much.

We initially focused on the health and safety of our workforce, demobilized over 1,300 employees and made sure they got home safely. We increased health campaigns and followed up with calls to ensure workforce safety. We took action to ensure the financial health of the company to preserve cash and most importantly employment as well as support for our local community supplier base, and reinforced our communication efforts to maintain our workforce well informed. As such, we positioned ourselves well to withstand this storm.

We finalized our safety and health protocols and returned to operations in close coordination with our clients, with actions that cover aspects such as preventing our workforce from getting infected, preventing the virus from getting into our operations, and plans for reacting should symptoms be present. We are now working on what will be the new norm of operations going forward and in strengthening certain key processes in order to come out stronger from the crisis and well prepared to grab the opportunities that will become available.

How do you think the coronavirus pandemic will impact the mining industry as a whole?

The coronavirus pandemic 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. But, 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 in order to cope with the crisis. As social distancing becomes a necessity, we will see a bigger push for automation and tele-remote operation.

All these immediate changes generate additional cost at first, which generates a need to increase productivity to mitigate it. Therefore, changes that had been set aside or rejected in the past will find significant tail wind to be revisited and implemented. We are working on changes required in order to emerge strengthened from this crisis and benefit our customers.

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