Economic Contributions

Hudbay strives to create sustainable value for our shareholders while simultaneously contributing to social and economic progress in the regions where we operate.

In 2014, Hudbay contributed:

• 1,668 permanent jobs, 9,894 contractor jobs (full-time equivalent positions based on hours worked) and 49 summer student jobs
• $200.9 million in wages and benefits
• $9.2 million in municipal taxes and grants
• $13.5 million in funding to local communities through land use payments (including lump-sum life of mine land acquisition payments), new housing and infrastructure related to resettlements, and voluntary community investments
• $0.9 million in charitable donations

In 2014, our net payment to governments related to our projects and mining operations, other than municipal taxes and grants, was a net credit of $16.8 million. This represents payments to governments in Peru and the US of $6.5 million, less a net credit in Canada of $23.3 million related to re-filing prior-year tax returns to reflect the New Mine status of the Lalor project.  

Payments to Governments

Hudbay is a supporting company of the Extractive Industries Transparency Initiative (EITI) in its efforts to establish a global standard for transparency regarding the host country governance of natural resources and full disclosure of government revenues from its extractive sector. Our Peruvian subsidiary, Hudbay Peru SAC, as a member of the Peruvian Mining Society, is supporting the EITI process in Peru.

In Canada, we were actively involved in an initiative undertaken by the Resource Revenue Transparency Working Group, a collaboration of Canadian exploration and mining associations and civil society organizations, to provide Canadian federal and provincial governments with a blueprint for a government payment reporting framework for all publicly traded mining companies.

The timing of payments and level of tax-deductible expenditures on Hudbay’s growth projects result in significant variances in period-to-period comparisons of taxes paid. We expect taxes paid in 2013 to 2015 to be relatively low as a result of the tax-deductible finance expenses and mining expenditures to develop our growth projects along with the available tax credits associated with these expenditures. The tax treatment of these items is important because mining is highly capital intensive and requires substantial early-stage expenditures. After our projects commence commercial production and the early-stage expenditures associated with our growth projects are deducted for tax purposes, a higher level of taxes is expected to be paid in future periods.

In anticipation of the reporting requirements under Section 1504 of the Dodd–Frank Wall Street Reform and Consumer Protection Act, and the new Extractive Sector Transparency Measures Act in Canada, Hudbay has worked to expand our internal reporting process to more fully identify payments to government. This report includes data collected based on the original regulators that were proposed under the Dodd–Frank Act (which have since been struck down).