Supply Chain Stewardship

Operations

All employees and contractors working at our sites are expected to meet the Company’s environmental, health and safety, and human rights standards, as described throughout this report.

Suppliers

The direct supply chain for our copper concentrate and zinc metal products originates in Hudbay’s own mines in northern Manitoba, with the exception of some purchased zinc concentrate that augments Hudbay’s production as feed to our zinc metallurgical facility. The purchased concentrate represents 24% of the feed to the zinc metallurgical plant and is primarily sourced from NAFTA and European Union countries (19% of feed), with some sourced from Africa (5% of feed). Concentrate supplied from Africa does not originate from the Democratic Republic of the Congo (DRC) or from countries neighbouring DRC. Purchased zinc concentrate is processed into zinc metal, representing approximately 12% of Hudbay revenue.

The indirect supply chain for energy, goods and services used in the transformation of ore and concentrate into products includes thousands of suppliers. This supply chain includes operating supplies, maintenance supplies, energy and fuels as well as capital goods:

• In Peru, our supply chain in 2014 was all related to the capital investment in our Constancia project, ranging from engineering and construction services to mine haulage equipment and the grinding mills installed in the process plant. Our top 50 suppliers accounted for 94% of our spending, and 93% of our spending in 2014 was with suppliers based in Peru.
• In Manitoba, our supplier base is wider and relates to production operations and capital projects. Our top 50 suppliers represented 76% of our spending in 2014, and 90% of spending was with suppliers based in Canada, with another 9% of spending with suppliers based in other Organisation for Economic Co-operation and Development (OECD) countries. These suppliers provided goods and services including engineering services, electricity, spare parts for equipment, and capital equipment such as new underground haul trucks.

The top 10 suppliers and service providers to Hudbay in 2014 were:
Ausenco Peru S.A.C.	CN (Cad)
Cosapi S.A.	Manitoba Hydro
Ocean Partners USA Inc.	Primax S.A.
San Martin Contratistas Generales	Serpetbol Peru S.A.C.
Siemens S.A.C.	Stracon GyM S.A.

We believe that our greater stewardship responsibility is at the local supply level, because our influence is much greater with small local suppliers. Our major international suppliers have their own internal requirements and government regulations to comply with, and much of our procurement is in countries with robust environment, health and safety, and human rights regulation.

We therefore focus our supply chain sustainability efforts on encouraging and supporting local suppliers in fulfilling their social responsibilities, often working with them to establish appropriate health and safety, environmental or quality systems and processes.

Products

Our two main products, copper concentrate and zinc metal, come from our own mines in Canada and Peru, and from purchased zinc concentrate:

• 80% of copper concentrate is sold to smelters in North America and Europe, and 20% to smelters in Asia. From there, several stages of melting and purifying the copper content ultimately result in 99.99% pure copper, which provides the building block for many of life’s essentials.
• We ship cast zinc metal produced at our Flin Flon zinc plant by rail and truck to industrial customers (primarily galvanizers who use it to protect steel from corrosion) throughout North America.

Copper and zinc products are accompanied by material safety data sheets that provide details on product composition, toxicology, handling, storage and exposure issues. We also meet our product stewardship commitments by collaborating with governments and industry associations such as the International Zinc Association.