"In H2 2018 we were able to operate the plant at an annualized rate of approximately 52 million mt/y throughput, which is above the nameplate capacity of 51 million mt/y. We also delivered a 1% improvement in recovery."

Suresh Vadnagra

EXECUTIVE GM OPERATIONS AMERICAS, MMG; PRESIDENT, MINERA LAS BAMBAS

February 22, 2019

Could you provide the latest figures and milestones for the Las Bambas operation?

2018 was a strong year for Las Bambas considering some of the operational challenges experienced. We were able to recover from those challenges and full year production reached just over 385,000 tonnes (mt/y). C1 costs compared to 2017 reflect the lower production with some of the cost pressures associated with increased mining and milling volumes absorbed through a series of efficiency improvement programs. Our expectation for 2019 is between 385,000 and 405,000 mt/y of copper.

As a very large operation, what is the strategy for Las Bambas going forward?  

The strategy for Las Bambas is to maximize its value and grow the asset. The strategy consists of three main elements: the first one is to operate Las Bambas as efficiently and cost effectively as possible. A lot of the focus over the last 24 months has been on no or low capital initiatives to debottleneck the whole operation and improve efficiency. These actions have helped us increase mining volumes, milling throughput rates and recoveries. As an example, in H2 2018 we were able to operate the plant at an annualized rate of approximately 52 million mt/y throughput, which is above the nameplate capacity of 51 million mt/y. We also delivered a 1% improvement in recovery. We have an aggressive work program to continue debottlenecking the operation and increase throughput by 5% to 10% over the next few years.  

The second part of the strategy is to sequentially develop the satellite mines, Chalcobamba and Sulfobamba, which are part of the Las Bambas project. The only pit currently active is Ferrobamba. The third part of the strategy is focused on growing the resource base and potential expansions. The three pits currently part of the project represent less than 10% of the overall Las Bambas tenement, which is 35,500 hectares. Last year we made significant progress in obtaining surface access and completing more surface studies. This has increased our confidence in the geological potential of the Las Bambas tenement. Our key focus now is on obtaining further land access and permitting to commence drilling of the most prospective targets.

How important is Las Bambas in MMG’s strategy to have longer-life assets?

Las Bambas is a first tier, world-class asset and MMG’s flagship operation. Since the Las Bambas acquisition in 2014, MMG has been consistently shifting its portfolio towards long-life, high-quality assets. The company is focused on continuing to grow in the regions in which it currently operates. Las Bambas provides a good base for MMG’s further growth in the region.

Las Bambas’ current life spans more than two decades. How will technology evolve during this time frame?

The mining industry has historically been a bit of a dinosaur in terms of using technologies to transform the business. We need to become much more rapid in adopting technologies. It is very difficult for us to imagine how mining operations are going to be run in the distant future, but it is going to be completely different. In the particular case of Las Bambas, the current mine life is more than 20 years, but we see the potential to continue for 60 or 70 years, so we plan for the long term. We have a well-developed short and medium term road map to implement innovative technologies that support our quest for efficiency and effectiveness. We also have a strong capability to develop technology solutions to help us address some of our critical issues. An example is the use of smart analytics to improve mill operations. Technology for us goes beyond digital technologies and includes automation as well as more conventional technology. We are partnering with research institutes to advance the development of some technologies that could be transformational for our industry.

What is the current situation of the concentrate corridor to Matarani?

Historically, we invested more than US$235 million on improving the road. We have continued to invest in micro paving and improving other sections of the road specifically through communities. We are continuing to work together with the government and the communities to address concerns. We are also progressing studies to look at alternative logistics longer term solutions. This includes rail solutions, where we are participating in a government sponsored study of a railway project connecting the port of Marcona with Apurimac.

How feasible would it be for different mining companies to share some of the key infrastructure?

Infrastructure is a key enabler for mining projects. Apurimac has a series of mining projects that would benefit from better infrastructure, which can be shared. Collectively, these projects, together with government, have much greater capacity to support the development of better infrastructure. However, it is a catch 22 situation: what needs to come first, the infrastructure that incentivizes mining projects or the mining projects that support the development of infrastructure? Whichever way we look at it, this requires significant coordination between the various parties.

How are you working with the new regional authorities in Apurimac?

We have had very constructive engagement with the new authorities, who see mining as a major promoter and enabler of development in the region. It is important to build strong and sustainable relationships with the new authorities, understanding their views and aspirations and learning how we can contribute towards their development goals for the region. We continue to drive progress in education and health, and we have a commitment to carry out Works for Taxes projects focused on education, infrastructure and irrigation. One of the key challenges for Apurimac is the high rate of anemia in children under 36 months, which is at 54%. The new regional government has a plan to eradicate anemia – aligned with one coming from the central government – and we are looking at programs to support this initiative.

Moving forward, what role is Peru set to play in the global copper market?

Peru is ideally placed to capitalize on the growth in copper demand that is forecast for the coming years.  This is considering the maturity of some of the other copper rich regions where many of the copper projects are moving into more challenging stages of the life cycle. With the right support and direction from government, I believe Peru could become the world’s largest copper producer in the coming years.

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