2014 Annual and CSR Report Switch to Spanish Language
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Social Impact

When Hudbay was founded in northern Manitoba, the beginning of a town was created too. The Company and the town of Flin Flon have both grown over many decades. We understand the impact mining has on people and communities – and we take care to build long-term relationships, create partnerships and develop programs to ensure a lasting, positive impact.

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Same-day opening of Lalor and Reed strengthens Hudbay’s connection to northern Manitoba

Both Lalor and Reed are in the same region of northern Manitoba that CEO David Garofalo described as the “foundation of Hudbay’s success”. The two mines are projected to create more than 370 full-time jobs and to generate millions for the local economy. Although we are currently encountering recruiting challenges as we staff up at Snow Lake, the impact of Lalor, which is expected to operate for at least 15 years, will be particularly significant.

“Mining has been an important part of Manitoba’s economy for decades and these new mines will produce real benefits for local communities, including employment,” said Dave Chomiak, Manitoba’s Mineral Resources Minister. Chomiak also observed that Hudbay would be one of the few companies worldwide to open three mines in 2014. The Minister’s remarks were echoed by Snow Lake Mayor Clarence Fisher, who said “economic development is about both profits and people” and further noted that the Lalor mine would help provide a generation of stability for the area.

The efficient execution of every aspect of these projects – from exploration, permitting, project management and construction – is a testament to the skills and dedication of our employees and partners and to the strong relationships we have built with local communities and all levels of government.

Lalor met all of its key production milestones and was completed on time and on budget. Reed, built inside the Grass River Provincial Park and developed with innovative solutions to minimize its environmental footprint, achieved commercial production ahead of schedule and under budget. Both projects were also notable for their remarkable safety records. During construction, Lalor reported more than 1,000 days without a lost time accident (LTA) and Reed was completed, over the course of two years, without one LTA.

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Supporting long-term self-sufficiency: Community investment in Chilloroya and Uchucarco

Local voices must be heard so local ambitions are realized. This means doing more than creating jobs – it means collaborating to improve local health care and infrastructure, or even providing Internet access in Peru.

Hudbay’s Constancia project in Peru is located in a region of extreme poverty, with two communities, Chilloroya and Uchucarco, in what we define as our area of direct influence.* Working with the leadership in both communities, and officials in the regional government and NGOs, we negotiated long-term agreements that provide land to each community in compensation for community land used by the mine and assure payments of 160 million Peruvian Soles (approximately $60 million). Approximately $20 million of this amount was paid directly to community members in 2012, and the balance is paid in annual installments over a 15-year period. The agreements clearly define commitments to use these annual installments to invest in health, education and social development in Chilloroya and Uchucarco.

To ensure these investments have the positive impact that all parties to the agreements intended, the land sale agreements established multi-sectorial committees for development (CMD) with each community. Each CMD is made up of representatives from Hudbay and the local community, and it is charged with evaluating needs, setting priorities and monitoring implementation of the development plans. This approach was recognized with the 2013 Sustainable Development Prize, awarded by the Peru National Society of Mining, Petroleum and Energy.

Hudbay has met all of its obligations under both agreements, and invested in a wide range of initiatives, including an electrical power distribution system, providing 410 families in Chilloroya with better electrical service; improvements in the local health centre at Uchucarco, which included enabling the centre to hire a doctor, an obstetrician and a nurse; and the “Learn and Begin” program, aimed at helping students throughout Chumbivilcas province improve their reading and math skills.

We continue to work closely with the CMDs and the communities. In 2014, some members of the Uchucarco community sought to re-open discussions on their community agreement. Through a multi-party effort with community members and government officials, we were able to work through the challenge.

* Source: National Institute of Statistics and Informatics (INEI) in Peru

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Having a positive impact: Managing change in Constancia

During the height of the construction phase of our Constancia project in Peru, there were more than 7,000 people on-site, working in round-the-clock shifts. Of these, over 1,000 were local workers, surpassing our commitments with the communities. In fact, during the peak of construction, we employed an average of 32% more locals than the number committed to in our community agreements. In addition to providing jobs and on-the-job skills training, we signed agreements for scholarships with Peruvian universities to develop mining education and training programs and worked with technical institutes to provide semi-skilled trades and heavy equipment training.

We also engaged local businesses to provide us with a variety of goods and services, ranging from packaged meals and laundry services for our work crews to heavy equipment rental and maintenance.

However, it takes many more people to build a mine than it does to operate one. So as the development phase of Constancia wound down, the need for people and supplies declined correspondingly. From the day the first shovel went into the ground, we made it a priority to be sure that everyone involved in the project knew when construction would end and what our requirements would be going forward for employees and service.

We held several meetings with our main contractors well in advance of the transition. Our community relations group helped create community employment committees, and together with our local employment and procurement teams, they organized meetings to agree on a structured format for demobilizing the workforce and the heavy equipment that had been leased from local community pools. The goals were to minimize, as much as possible, the impact of the change and to find other sources to substitute or complement the income generated by the construction. As part of the awareness campaign, letters and posters were distributed throughout the communities.

As Constancia moves toward becoming an operating mine, we expect to employ 313 staff on a full-time basis, while our contractor, Stracon GyM, will have on-site jobs for approximately 400 people. Most of these positions will be in logistics or operations and open to local workers. We are supporting a number of skills development programs designed to help them qualify, and we were able to hire 17 people from local communities in the crusher area in December 2014 as a result of their technical training.

The region is home to several mining operations in different stages of development. For both employees and suppliers, the experience and skills gained at Constancia will make them attractive to other employers. We are also helping many local workers make a successful transition back to their traditional roles in farming and ranching through training in new technologies and evolving best practices in farming and cattle breeding.