Environment Energy Use and Greenhouse Gas

As users of fossil fuels to extract and transport ore, and electricity to run processing plants, Hudbay operations track energy consumption and associated greenhouse gas (GHG) emissions. We strive to reduce our impact by minimizing energy use and, where possible, reducing the carbon intensity of our operations.

In Manitoba, we set annual energy and GHG reduction objectives, which we strive to achieve through energy savings and continuous improvement projects. We also closely monitor the regulatory climate to guide our actions.

With Constancia and Rosemont still in the early stages of the mining lifecycle, the sites are just beginning to develop energy management plans. There is, however, a demonstration solar power site at the Rosemont field office that generates credits under the Tucson Electric Power program. We are testing various solar technologies to determine their viability for our future use and to provide feedback to the technology providers.

Constancia coming into production at the start of 2015 has impacted Hudbay’s overall energy and GHG profile in several ways:

• Our production of metal in concentrate more than doubled, and the substantial energy going into construction activities in Peru in 2014 has been replaced by energy going to operations, thereby substantially reducing overall energy intensity per tonne of contained metal in concentrate.
• At the same time, electricity consumption has increased to power the Constancia process plant, and electricity in Peru has a much higher emission factor than the hydro-generated electricity in Manitoba, thereby substantially increasing the indirect GHG emissions and increasing overall GHG intensity per tonne of contained metal.
• GHG emissions related to direct energy have also increased per unit of energy since in Manitoba approximately 50% of direct energy consumption is from combustion of propane while all the direct energy consumption in Peru is from diesel combustion, which has a much higher emission factor than propane.

Hudbay submits an annual climate change report to the CDP (formerly called the Carbon Disclosure Project) that can be accessed from the CDP website.

2015 Performance Highlights

Manitoba

• Total energy usage declined by 2.9% from 2014, with incremental improvements throughout the operations. Energy intensity, which is a measure of energy used per tonne of metal produced, was down by 4.1% from 2014.

Peru

• With the rise in copper production, energy consumption and GHG emissions also increased. The site achieved steady-state operation in August 2015, which will enable us to establish a GHG baseline from which we can develop reduction targets.
• Approximately 67% of GHG emissions are indirect emissions associated with the purchase of electricity from the Peruvian electrical network, while the remainder are directly related to fuel consumption at the site.

Arizona

• We have started developing a Rosemont energy management plan, as mitigation measures for GHG emissions are part of the permitting process. Among the proposed measures, the site design will minimize energy requirements and related emissions (for example, through the use of topography to minimize pumping). Currently, enough solar energy is generated on-site to power the administration building.