"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.

September 29, 2020

How has Ferreyros responded to the COVID-19 pandemic?

I would divide the Covid-19 timeline into three parts. Firstly, we took care of our people, bringing them back from projects to their homes as efficiently and safely as possible, and complied with the instructions of local authorities. We also helped our people to adapt to this new way of living and working, getting used to the sanitary protocols which have now become the norm, and to share this vital knowledge with their families. Secondly, we took care of the company from an operational standpoint, with Ferreyros’ customers and suppliers in mind. This involved revising budgets, cutting down superfluous costs, putting together customers’ financial relief packages, enhancing our virtual training programs and identifying other priority areas for customers. Thirdly, we contributed to the ecosystem in which we live and operate, mainly providing personal protection equipment to hospitals in the country and a free use of machinery for fumigation to several local municipalities.

This situation has given us the opportunity to challenge some paradigms about remote working, goal-oriented performance and enhancing synergies. This disruption has made management teams think how to reorganize their working forces.

Have you noticed optimism returning to the market in the last couple of months?

Since August, the market has been very active. Mining companies are making new requests for 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.

We had just introduced our new 400-ton electric drive trucks in Peru. The CAT 798 truck enhances our portfolio, providing customers with the option to choose between electric drive and mechanical drive trucks, both in 400-ton payload capacity. These new trucks are joining 120 CAT 797 mechanical drive trucks in the same class size, successfully running in Peruvian mines, which represent a population market share of more than 75%.

What progress has Ferreyros made at Mina Justa and Quellaveco?

Ferreyros was recently awarded with the two large mining fleet tenders that took place in the country – Mina Justa and Quellaveco, with a total combine of around US$400 million in new equipment. Mina Justa fleet is almost fully delivered, on time, with only four trucks left to arrive. Regarding Quellaveco, we have delivered about 30% of the mining fleet and expect to reach 50% by the end of 2020.

From a technology standpoint, both mines will feature leading-edge innovation. Marcobre for Mina Justa is considering using, in the future, alternative fuels with our trucks and Quellaveco is considering many technology upgrades to their fleet, such as autonomy packages.

How has Ferreyros’ service center in La Joya impacted local employment since opening?

Ferreyros directly employs more than 3,500 people in the country. More than 1,000 people work and live in customers’ isolated minesite operations. We invested five years ago US$ 40 million in a world-class Customer Rebuild Center in La Joya, located one hour drive from Arequipa. We aim to promote a sustainable development hub in this mining area, providing fair and top-class employment opportunities for future generations. Today, La Joya employs 350 people, 70% of them from the city of Arequipa.

What underground mining equipment does Caterpillar provide, and how do you view the transition to underground projects in Peru?

In Peru, we have around 80% of the market share for load haul dump (LHD) equipment. Cat’s R1700 LHD is the future of underground mining equipment, producing 40% more than the R1600, while using 34% less fuel per ton. In 2021, we will start a project for automation and remote operation from the surface for a R1700 unit.

Many mining companies here still use all-highway haulers for underground mines, but that this will change and evolve to proper underground haulers in time. Yanacocha’s Chaquicocha deposit transitioning underground will be a big step in this direction.

Do you have a final message for the Peruvian mining industry?

I would like to see a country proud and in love with mining, understanding that this industry is about progress for everyone. We need to collaborate all together to achieve long term economic progress and eradicate poverty, looking for the greater good and working in a harmonious coexistence between mining, population and authorities. Ferreyros is a social player, and we strongly believe that our purpose goes far beyond business: we have the responsibility of generating positive impacts in society, supported by the company’s values and ethics.

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