Social Impact Community Development

Mining done right can be a catalyst for positive change. We make strong efforts to leverage our capabilities and resources to advance the sustainable development of communities near our operations and create conditions in which our business and our neighbours can flourish.

Hudbay’s community development efforts focus on:

• Helping communities build capacity to ensure sustained prosperity;
• Supporting community efforts to improve the quality of the natural environment; and
• Contributing to social cohesion and community spirit.

When we enter a region, we engage with the communities to understand their social and economic development needs and priorities. From there, we seek to create employment and business opportunities for local people and we work with the communities to develop programs focused on delivering lasting benefits.

In Peru, we made specific commitments to invest in health, education and social development as part of the land use agreements with the communities of Uchucarco and Chilloroya. Multi-sectorial committees for development (CMD), comprising Hudbay and community representatives, approve and oversee the projects being carried out using the proceeds of the agreements.

In addition, we signed co-operation agreements with communities in our indirect areas of influence, which spell out social development projects that we will work on together within a specified voluntary budget provided by Hudbay. We engage with different levels of government and seek out development projects that can be implemented as public-private partnerships. Our Technical Assistance Office also acts as a lobby group for local municipalities, helping them qualify for public and private funding of public investment projects.

In Canada, Hudbay’s first mine gave rise to the towns of Flin Flon and Creighton, and we remain an integral part of the social and economic fabric of the region. Today, we prioritize educational support and training, as a means of strengthening community capacity and building a local talent pool available to Hudbay and other employers. We are a primary supporter of the Northern Manitoba Mining Academy and we have strong affiliations with local universities, colleges and high schools.

While the Lalor mine resources and exploration potential provide a foundation that ensures we will continue to operate in the region well beyond the 100th anniversary of the discovery of the first deposit, in a matter of years 777 will reach the end of its life as an operating mine. While our efforts to find additional resources, including the exploration of the War Baby claim in 2015, have not been fruitful, we are working to optimize our cost structure in order to maximize the economic life of the known reserves and assessing future options for the Flin Flon metallurgical complex. We have also engaged a community planning consultant to assist us in 2016 in working with our colleagues and with the communities around Flin Flon to help ensure a smooth and effective social and economic transition. Community leaders have noted that opportunities exist and enabling conditions need to be identified for economic diversification, and Hudbay is committed to supporting them in their efforts.

In Arizona, Hudbay supports longstanding commitments related to well owner protection, community water pipeline construction and water replacement mitigation plans. We have also developed new programs and support priorities (see below).

2015 Performance Highlights

Corporate

• We finalized our Community Giving and Investment Standard and Local Procurement and Employment Standard. The Community Giving and Investment Standard outlines the strategic approach that Hudbay sites are expected to follow for voluntary support, contributions and investments in local communities. It emphasizes community involvement, mutual benefit, partnerships, sustainability and capacity development.

Arizona

• In keeping with the new corporate standard, we formalized our Arizona contribution policy, establishing clear support priorities: education (in particular, science, technology, engineering, environment, agriculture and mathematics initiatives); social services; military and veterans support; job training, research and development; and infrastructure. Our employees are very active in our community programs and were surveyed on their support preferences as part of the policy development process.
• We introduced an employee giving program, in which the Company matches 50% of employee contributions through United Way of Tucson and Southern Arizona to an annual maximum match of $1,000 per person.
• Ongoing financial commitments include the following:
  • Three-year, $10,000 per year commitment to the National Math and Science Initiative earmarked for the Sahuarita School District in Sahuarita, Arizona
  • $24,000 in scholarships provided to 10 high school students and three military veterans
  • Sponsorship of El Tour de Tucson cycling event
  • Ongoing partnership with the University of Arizona and Department of Natural Resources to support graduate student research

Peru

• In addition to fulfilling the annual social development commitments under our land use agreements, we completed our first project under the Peruvian Works for Taxes program. This program allows a company to pay up to half of its income tax through contributions to public infrastructure projects in communities near its operations. Hudbay funds were used to build an irrigation system in the district of Livitaca.
• As a way of supporting the “Sierra Productiva” project for agricultural entrepreneurs, Hudbay co-financed a dairy plant in the district of Velille together with the Ministry of Agriculture.
• The Global Indigenous Development Trust north/south exchange program presented a unique opportunity for local community leaders from Chumbivilcas province to take two trips to Canada to see Canadian best practices in mining and agriculture. With Hudbay’s financial support, participants took part in workshops and hands-on training in Timmins (an Ontario mining community), visited farms, and met with municipal, government and community leaders in Toronto.

Manitoba

• We agreed to donate company property to the town of Snow Lake for a new EMS station.
• Hudbay donated C$206,847 to community initiatives and university research benefiting the Flin Flon/Snow Lake area, primarily in the areas of health, education, environment, culture and sports. Major contributions ($10,000 or more) included:
  • Flin Flon Community Adult Learning Centre sponsorship
  • United Way of Winnipeg
  • Flin Flon Bombers junior hockey team
  • Green Project – multi-year project aimed at accelerating restoration of forest land around Flin Flon and Creighton