The Constancia mine, as its name suggests, is a critical part of Hudbay Minerals’ long-term plans. The
Toronto-based company bought the concession from Norsemont in March 2011 and began construction last
August. The project, located 4,300 metres above sea level in the Cuzco region of Peru, is the 85-year-old
company’s first project abroad. Despite the heavy rains of the Peruvian Altiplano, construction work is well
underway thanks to a management team that is ambitious as it is adaptable.
The extent of the Yauri-Andahuaylas copper belt, and the vast opportunities it offers for further exploration work, were the main reasons why Hudbay
decided to settle in this rather remote, wet region. “We felt that the area had huge potential,” says Cashel Meagher, Hudbay’s vice-president for South
America. The Norsemont property happened to lie in the middle of the 300-kilometre belt, right between GlencoreXstrata’s Las Bambas mine, northwest of the
Apurimac region, and its Tintaya and Antapaccay operations, in the Cuzco region. “We felt that if we established ourselves in a mining belt, we could
reproduce what Flin Flon had done for Hudbay in the past, by having several mines, even several generations of mines, over a long time,” Meagher adds.
Since 1930, Hudbay has proven its ability to process volcanic massive sulphide (VMS) copper ore deposits in the Flin Flon greenstone belt of northern
Manitoba. With Constancia though, Hudbay took on the challenge of porphyry copper as a means to diversify its portfolio while staying close enough to its
field of expertise. “Porphyry deposits are a little bit like VMS deposits, since they are both sulphide-bearing minerals,” says Meagher. “They require the
same type of milling.”
Hudbay had money to spend in 2010 and was actively looking to invest in the right property. “We had over a billion dollars in cash and we wanted to go out
and acquire and build something,” points out Meagher. The company was pursuing a project that would align with the Toronto time zone, and be located in an
investment-friendly, politically stable country. The Constancia project emerged as close to ideal. “Norsemont had its environmental impact assessment
permit in December 2010, which was a major milestone, and we recognized that it was a project ready to move ahead,” he says. Hudbay acquired Norsemont
three months later. A $750-million streaming agreement with Silver Wheaton ended up completing the business package. The royalty company has claim to all
the silver Hudbay produces from its 777 mine in Manitoba, as well as from the Constancia and Pampacancha pits.
Finding the right partners
In order to reduce the potential risks arising from a lack of experience abroad, Hudbay has opted for an uncommon business strategy and arranged for an
alliance with Peruvian company StraconGyM. “We have a sort of unique situation here,” says Meagher. “In the first two and a half years, they will do our
civil earthworks, and then for the next two and a half years, our mining.” Based in Lima, most of the earthworks and mining expert’s operations are located
in Peru. It boasts a workforce of 4,500 people. “Besides reducing the risks [of having no experience in Peru], it gives us more insurance on our capital
cost because StraconGyM actually does mining, whereas when an engineering firm estimates these things, they usually underestimate them,” explains Meagher.
“These guys actually have real experience with real dollars.” Besides the earthworks, StraconGyM is in charge of supplying some mining equipment and
training the operators. “All of this is on a fee basis, and we jointly manage the program.” Once the five-year alliance ends, the labour force and key
supervisors will become Hudbay employees.
The remaining construction work has been handed over to EPCM contractor Ausenco. “The reason why we are using an EPCM is because our project down here is
new to us,” says Meagher. “We are thus relying on people that have done these types of things before: Ausenco on the engineering and StraconGyM on the
Preliminary work began a year ago, following the approval of a $1.5-billion investment by the board. The company plans to begin production in the second
quarter of 2015, after a near three-year construction phase. Nearly 3,500 workers – 1,100 of them from neighbouring villages – were hired for the heavy
The mine recently received the main components of the processing plant, as well as the first pieces of its mining fleet, which will eventually include 18
Caterpillar 793F haul trucks, two Terex SK-L drills, three Hitachi EX5600-5 shovels and two Caterpillar D10T bulldozers. The delivery of the largest pieces
of equipment will follow the completion of the main access road. “The idea,” explains Meagher, “is that in January, we begin our pre-strip, and for that we
will need our drill, our front-end loaders, and a couple of trucks and shovels.”
The construction of the processing plant is also well underway, as the company has decided to go with something “not too fancy,” according to Terry Linde,
the project director. “Our primary crusher is a 60-inch-by-89-inch gyratory,” he explains. “From the stock pile, the ore will report directly in two lines
to the concentrator. We’ve got two SAG mills and two ball mills, all of which are manufactured by FLSmidth. Our SAG mills are 36 feet in diameter and 24
feet long. Out of the SAG mills, the ore reports to the ball mills, which are 26 feet by 20 feet. Both the SAG mills and the ball mills are 16 megawatts.”
The ore will then report to the flotation unit, provided by U.S.-based Orotech.
The 82,000-tonne capacity plant will produce a concentrate between 27 and 29 per cent copper, with about eight per cent moisture, according to Meagher. The
recovery rate is estimated at 91 per cent.
Building the two power lines needed to run the 96-megawatt project is a significant risk for Constancia. The first line has been awarded to Peruvian
engineering company Abengoa, while the second is being built by the government to connect the neighbouring Tintaya mine to the grid. Given the limited
control Hudbay has over scheduling, the project managers had to devise a backup plan in case the power is not connected by their March 2014 deadline. “If,
for some reason, one of those two lines doesn’t meet that timeline, we can still commission the movement of the mills and the operation of the plant for
inspection using generators until August,” says Meagher. “That way we have three to six months of contingency. What we can’t do is to start introducing ore
and make the plant work.”
Up to this point, the biggest challenge has been earthworks. The valleys upon which the 445-million-tonne tailings pond will be built are currently covered
with bog that cannot support the tailings and their dam. Hudbay will have to remove the bog and store it behind a dam in order to have a stable,
functioning tailings pond in the future.
The job of stripping the bog has proven to be a bigger one than first thought. “We had estimated 80,000 cubic metres of unsuitable material, and we have
encountered well over 300,000 cubic metres,” says Meagher. “So we had to change some of our plans on managing that area and the storage dam, which is key
to the beginning of the construction of the tailings management facility.”
The weather has added its own complications. Earthworks such as the building of dams are quite tricky in this region due the rainy season, which has grown
steadily wetter. According to Meagher, the December precipitation has increased to 285 millimetres from 185 millimetres in the last five years.
Keeping an eye on the future
The inevitable obstacles of mine development, however, have not distracted the company from its long-term ambitions. Stripping work on the mine’s main pit
has not yet begun, but a second feasibility study, this time for the neighbouring Pampacancha pit, is underway. “One of the major selling points about this
project was essentially the exploration upside,” says Meagher. “It is in the 26,500 hectares that came with the project, but also in the adjacent claims,
where some juniors and majors are working. So we are building a database on all of the area, its geology and its mines, whereby we can start targeting, in
the next few years, the area we would like to go to.”
One the main hurdles to the expansion of the project was the tailings pond’s limited capacity. But Hudbay already has a mid-term plan to overcome that,
which has to do with its work at Pampacancha. There, explains Meagher, “The plan is to mine as fast as we can. When it is completed, we will do studies to
see if there is an opportunity to use it as another tailings base for us.” This would give Hudbay the ability to mine both the Constancia and any other
potential pit for a much longer period of time than the 16 years contemplated in the current feasibility study.
“We believe that we are in the middle of a major copper belt and we want to be what we call an early mover,” concludes Meagher. “We want to use that
leverage to be able to get other satellite deposits that can feed the plant we are currently building. We are definitely here to stay.”
Come rain or shine
Raise the subject of weather with the members of the management team at Constancia and they will respond a humourless smile. Heavy rains that sweep across
the high plains are a constant threat to the progress of the project’s earthworks, especially those that have not yet been compacted. “When you see a cloud
coming, it is just like Wimbledon,” says Meagher. “Someone has got to get out there and pull a tarp over the field, and you have to wait. If you don’t, it
washes away all of your work.”
“From November till March, we get rain nearly every day, sometimes several times per day, so we have to plan for any earthworks that we have to do,”
Managers first wanted to recover the time lost to rain delays by having night shifts. “But guess what, at night you can’t see the clouds coming,” says
Meagher. “So we had to stop the major earthworks at nighttime. There is no doubt that the rain has put us behind schedule on the earthworks.”
Undeterred, the team has found ways to adapt and prepare for the next stage of development. “We are reworking our execution strategies so that we are
processing clays during the dry season and put it under tarps for placement of material during the wet [season],” explains Linde. “We also have a robust
program for monitoring lightning storms.” This will be essential as progress on the construction of the processing plant will require cranes and crews
working at height.