antamina two and a half years later…
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Slide 1Analysts' Site VisitApril 26, 2004
Antaminatwo and a half years later…
Antaminatwo and a half years later…
Slide 2Analysts' Site VisitApril 26, 2004
AgendaAgenda
• Introduction
• Country Overview
• Operations Overview
• Environment, Health, Safety & Community
• Production
• Introduction
• Country Overview
• Operations Overview
• Environment, Health, Safety & Community
• Production
Slide 3Analysts' Site VisitApril 26, 2004
Country OverviewCountry Overview
Slide 4Analysts' Site VisitApril 26, 2004
Economic ContextEconomic Context2003A 2004F
• GDP Growth 4.0% 4.0%• Inflation rate 2.5% 2.5%• Exchange rate (end of period) 3.46 3.50• % Devaluation (Appreciation) -1.4% 0.0%• Exports (US$ Millions) 8,954 10,300• Imports (US$ Millions) 8,244 8,800• Fiscal Deficit (% of GDP) 1.9% 1.6%
2003A 2004F• GDP Growth 4.0% 4.0%• Inflation rate 2.5% 2.5%• Exchange rate (end of period) 3.46 3.50• % Devaluation (Appreciation) -1.4% 0.0%• Exports (US$ Millions) 8,954 10,300• Imports (US$ Millions) 8,244 8,800• Fiscal Deficit (% of GDP) 1.9% 1.6%
Slide 5Analysts' Site VisitApril 26, 2004
Macroeconomic SituationMacroeconomic Situation
• Low and stable inflation interest rates.• Stable exchange rate.• Declining Country risk: 337 basis points • Mining exports leading growth.• Main concerns:
– Government debt– Political turmoil– Unrest
• Low and stable inflation interest rates.• Stable exchange rate.• Declining Country risk: 337 basis points • Mining exports leading growth.• Main concerns:
– Government debt– Political turmoil– Unrest
Slide 6Analysts' Site VisitApril 26, 2004
Fiscal SituationFiscal Situation
• Higher spending, higher taxes to lower deficit.• Non flexible public expenses
– 86% of public spending on pensions, debt service and payroll
• Public debt:– 25% of public spending– 4.8% of GDP
• Government requires more revenue to remain solvent– ITF and other new taxes
• Higher spending, higher taxes to lower deficit.• Non flexible public expenses
– 86% of public spending on pensions, debt service and payroll
• Public debt:– 25% of public spending– 4.8% of GDP
• Government requires more revenue to remain solvent– ITF and other new taxes
Slide 7Analysts' Site VisitApril 26, 2004
Privatization ProcessPrivatization Process
• 2003 proceeds: $13.3 million versus budget of $500 million.
• Government re-launching privatization:– New head of ProInversion – Budgeted proceeds in 2004: $400 million– Congress not aligned with Government’s strategy
to attract investment– Successful privatization of Yuncan hydroelectricity
project.
• 2003 proceeds: $13.3 million versus budget of $500 million.
• Government re-launching privatization:– New head of ProInversion – Budgeted proceeds in 2004: $400 million– Congress not aligned with Government’s strategy
to attract investment– Successful privatization of Yuncan hydroelectricity
project.
Slide 8Analysts' Site VisitApril 26, 2004
Economic PolicyEconomic Policy• Good external image:
– “Peru is doing a lot in macroeconomics but needs more dynamism in microeconomics and labor issues” (The Economist, March 2004)
– 63.4% of participants in the Annual Governors Assembly of BID considers that Peru have a positive image for investors
• Pro-market economic policy in the MEF:– Inability to fend off political pressures– Has imposed unwise taxes (ITF).
• Populism in the Congress:– Mining royalties– Changes in labor law
• Good external image:– “Peru is doing a lot in macroeconomics but needs more
dynamism in microeconomics and labor issues” (The Economist, March 2004)
– 63.4% of participants in the Annual Governors Assembly of BID considers that Peru have a positive image for investors
• Pro-market economic policy in the MEF:– Inability to fend off political pressures– Has imposed unwise taxes (ITF).
• Populism in the Congress:– Mining royalties– Changes in labor law
Slide 9Analysts' Site VisitApril 26, 2004
Political ContextPolitical Context
• Halfway through its mandate, the Government is still losing popularity:
• Opposition is leading the political debate.• Congress, judiciary and new Regional
Governments are also very unpopular.
• Halfway through its mandate, the Government is still losing popularity:
• Opposition is leading the political debate.• Congress, judiciary and new Regional
Governments are also very unpopular.
Slide 10Analysts' Site VisitApril 26, 2004
President Toledo’s PopularityPresident Toledo’s Popularity
Source: Apoyo S.A. April 2004Source: Apoyo S.A. April 2004
NO OPINION2%
APPROVES9%
DISAPPROVES89%
Do you approve or disapprove the manner in which President Alejandro
Toledo manages the country´s affairs?
Do you approve or disapprove the manner in which President Alejandro
Toledo manages the country´s affairs?
Slide 11Analysts' Site VisitApril 26, 2004
Will Toledo Finish his Term?Will Toledo Finish his Term?
• Economy: mostly under control.• Demonstrations: not many in 2004, so far.• Anti-system movement (Antauro Humala):
not powerful.• Opposition: at the moment, not keen to see
the Government fall.• Pro Fujimori movement: not powerful alone.• Government corruption scandals:
complicated and unpredictable.
• Economy: mostly under control.• Demonstrations: not many in 2004, so far.• Anti-system movement (Antauro Humala):
not powerful.• Opposition: at the moment, not keen to see
the Government fall.• Pro Fujimori movement: not powerful alone.• Government corruption scandals:
complicated and unpredictable.
Slide 12Analysts' Site VisitApril 26, 2004
General Context for CMAGeneral Context for CMA
• Main concerns– Labor relations at a national level;– Difficulties maintaining constructive dialogue;– Very low Government approval ratings.
• Main concerns– Labor relations at a national level;– Difficulties maintaining constructive dialogue;– Very low Government approval ratings.
Slide 13Analysts' Site VisitApril 26, 2004
CMA ResponseCMA Response
• Remain neutral but engaged.• Aggressive communications effort.• Developing grass-roots support through
community development programs.• Well positioned to weather political storms.
• Remain neutral but engaged.• Aggressive communications effort.• Developing grass-roots support through
community development programs.• Well positioned to weather political storms.
Slide 14Analysts' Site VisitApril 26, 2004
Operations OverviewOperations Overview
Slide 15Analysts' Site VisitApril 26, 2004
OwnershipOwnership
%BHP Billiton 33.75 Noranda Inc. 33.75 Teck Cominco Limited 22.50 Mitsubishi Corporation 10.00
100.00
Slide 16Analysts' Site VisitApril 26, 2004
OrganizationOrganizationBoard of Directors
Advisory Committee
President & CEO
Operations EHSC
Corporate Affairs &
Marketing
Finance & Admin
MarketingHuman
Resources
Slide 17Analysts' Site VisitApril 26, 2004
Initial Investment(December 31, 2001)
Initial Investment(December 31, 2001)
Mining equipment and preproduction stripping 286Concentrator and ancillary facilities 771Concentrate pipeline 128Port 108Infrastructure (road, camp, power) 128Other Owners Costs 340
1,761Acquisition, Land, Exploration, Feasibility 204Financing and working capital 264
2,229
- Mine: Eastern range of the Andes, between 4,200 y 4,700 masl.
- Port: Near Huarmey.
Lima
Antamina“Punta Lobitos”
Location
CMA’s area of influenceCMA’s area of influence
Slide 19Analysts' Site VisitApril 26, 2004
InfrastructureInfrastructure
• Access Road:– 120 km from Laguna Conococha to mine site.– Upgraded 44 km of existing road.– Built 76 km of new road in very challenging
conditions.
• Power:– Switching station and 58 km, 220 kV power line to
supply 120 MW to mine site.– 5.5 km, 66 kV power line to supply 3 MW to port.
• Access Road:– 120 km from Laguna Conococha to mine site.– Upgraded 44 km of existing road.– Built 76 km of new road in very challenging
conditions.
• Power:– Switching station and 58 km, 220 kV power line to
supply 120 MW to mine site.– 5.5 km, 66 kV power line to supply 3 MW to port.
Slide 20Analysts' Site VisitApril 26, 2004
Reserves & ResourcesDecember 31, 2003
Reserves & ResourcesDecember 31, 2003
MillionTonnes
Cu%
Zn%
Agg/t
Mo%
Proven 275 1.27 1.01 14.1 0.03Probable 226 1.17 0.90 13.2 0.03Total 501 1.22 0.96 13.7 0.03
Mineral resource estimate1
Measured 28 0.50 0.20 4.9 0.03Indicated 31 0.47 0.27 5.9 0.03Total 58 0.48 0.24 5.5 0.03
Inferred resource1 28 0.79 0.99 13.0 0.02
Mineral reserve estimate
1. Does not include any material stated as reserves.
Slide 21Analysts' Site VisitApril 26, 2004
Ore Reserves by Ore TypeOre Reserves by Ore Type
41
18
10
24
45
Copper Low Bismuth (M1)
Copper High Bismuth (M2)
Copper Zinc Low Bismuth(M3)Copper Zinc HighBismuth(M4)Bornite Low Zinc (M5)
Bornite High Zinc (M6)
Slide 22Analysts' Site VisitApril 26, 2004
Mining PhasesMining Phases
First 2 years of production
Deposit outline4103 masl
3788 masl
4815 masl
Slide 23Analysts' Site VisitApril 26, 2004
Major Mining EquipmentMajor Mining Equipment
4Bucyrus 495 B Shovel
5Bucyrus 49R Drill
43Cat 793 Haul Truck
3Cat 994 Loader
Slide 24Analysts' Site VisitApril 26, 2004
Process OverviewProcess Overview
Coarse Ore StockpilePrimary Crushing
SAG/Ball Milling
Copper (Bulk) Flotation
Mo/Bi Separation
Concentrate Pipeline
Dewatering
Water Treatment
Mo and Bi Concentrate
Tails to Impoundment
To Irrigation of Plantation
Run-of-Mine Ore
Mine SitePort Site
Zinc Flotation
Shiploading
Concentrate Thickening and Storage
Slide 25Analysts' Site VisitApril 26, 2004
Primary Crusher & StockpilesPrimary Crusher & Stockpiles
Slide 26Analysts' Site VisitApril 26, 2004
CrushingCrushing
• Single 60” by 89” gyratory crusher.
• Crushed ore conveyed through 2.7 km tunnel.
• Radial stacker loads twin stockpiles each with 50,000 dmt live capacity.
• Three feeders under each stockpile.
• Single 60” by 89” gyratory crusher.
• Crushed ore conveyed through 2.7 km tunnel.
• Radial stacker loads twin stockpiles each with 50,000 dmt live capacity.
• Three feeders under each stockpile.
Slide 27Analysts' Site VisitApril 26, 2004
ConcentratorConcentrator
• Single 11.6 m by 6.4 m SAG mill.• Three 7.3 m by 11.0 m ball mills.• All mills variable speed direct drive.• Copper flotation circuit.• Zinc flotation circuit.• Bismuth/moly cleaning circuit.
• Single 11.6 m by 6.4 m SAG mill.• Three 7.3 m by 11.0 m ball mills.• All mills variable speed direct drive.• Copper flotation circuit.• Zinc flotation circuit.• Bismuth/moly cleaning circuit.
Slide 28Analysts' Site VisitApril 26, 2004
Concentrate PipelineConcentrate Pipeline
• 302 km from concentrator to filter plant.• 10” to 8” diameter pipe.• Single pump station at the mine site.• 4 valve stations• Zero problems with multiple concentrates.• Design throughput: 1.8 million dmt/year.
• 302 km from concentrator to filter plant.• 10” to 8” diameter pipe.• Single pump station at the mine site.• 4 valve stations• Zero problems with multiple concentrates.• Design throughput: 1.8 million dmt/year.
Slide 29Analysts' Site VisitApril 26, 2004
Port FacilitiesPort Facilities
• Concentrate slurry storage tanks.• Filter plant with four pressure filters• Concentrate storage shed:
– Capacity: 180,000 wmt of a single product, lower with multiple products.
• Pier and ship loader.• Water treatment facility and tree plantation.
• Concentrate slurry storage tanks.• Filter plant with four pressure filters• Concentrate storage shed:
– Capacity: 180,000 wmt of a single product, lower with multiple products.
• Pier and ship loader.• Water treatment facility and tree plantation.
Slide 30Analysts' Site VisitApril 26, 2004
CustomersCustomers
Slide 31Analysts' Site VisitApril 26, 2004
CustomersCustomers
• 75% of production is sold under long term contract.– 12 high-quality customers in 9 countries.
– Japan, Korea, Canada, Sweden, Finland, Germany, Belgium, Australia, Bulgaria.
• Balance of output is sold under spot and short term contracts to smelters and traders:– Chile, Peru, China, Germany.
• 75% of production is sold under long term contract.– 12 high-quality customers in 9 countries.
– Japan, Korea, Canada, Sweden, Finland, Germany, Belgium, Australia, Bulgaria.
• Balance of output is sold under spot and short term contracts to smelters and traders:– Chile, Peru, China, Germany.
Slide 32Analysts' Site VisitApril 26, 2004
Human ResourcesHuman Resources
National Labour 940 National Staff 403 Expatriate 28 Trainees and Temporary 70
1,441
Slide 33Analysts' Site VisitApril 26, 2004
Environment, Health,Safety & CommunityEnvironment, Health,Safety & Community
Slide 34Analysts' Site VisitApril 26, 2004
EHS Management SystemEHS Management System
Continuous Improvement
Commitment and Policy
Planning
Implementation
Checking and Corrective Action
Management Review
Slide 35Analysts' Site VisitApril 26, 2004
EHS Audit Program EHS Audit Program
• Internal Inspections and Audits.
• Shareholder Audits.
• Lender Oversight
– World Bank EH&S Guidelines
• Independent Tailings Review Board.
• Government.
• Stakeholders.
• Internal Inspections and Audits.
• Shareholder Audits.
• Lender Oversight
– World Bank EH&S Guidelines
• Independent Tailings Review Board.
• Government.
• Stakeholders.
Slide 36Analysts' Site VisitApril 26, 2004
Environmental Programs Environmental Programs
• Permits and Authorizations.
• Public consultation.
• Monitoring Programs:– Water quality
– Aquatic life
– Air quality
• Erosion Control and Revegetation Program.
• Solid and hazardous waste management program.
• Permits and Authorizations.
• Public consultation.
• Monitoring Programs:– Water quality
– Aquatic life
– Air quality
• Erosion Control and Revegetation Program.
• Solid and hazardous waste management program.
Slide 37Analysts' Site VisitApril 26, 2004
Permitsw Over 300 permits.
First experience for many regulatory agencies.
Types of permits required :
• Construction.• Water discharge.• Operations.• Fuel tanks.
Slide 38Analysts' Site VisitApril 26, 2004
• Public Hearings and Open House in Lima.
• Public Meetings in Project Area.
• EIA Widely Distributed, placed on Peruvian Mining and Energy Ministry web site.
Public Consultation ProcessPublic Consultation Process
Slide 39Analysts' Site VisitApril 26, 2004
Building a Sustainable Culture of Safety Awareness
Building a Sustainable Culture of Safety Awareness
• Standards.
• Training.
• Inspections and audits.
• Continuous improvement .
Slide 40Analysts' Site VisitApril 26, 2004
Safety ProgramsSafety Programs
• STOP.• ISTEC.• Safety Values.• Senior Management EHS Committee.• Contractor Management.• Inspections and Audits.• Transport Management.• Training.• Occupational Health.
• STOP.• ISTEC.• Safety Values.• Senior Management EHS Committee.• Contractor Management.• Inspections and Audits.• Transport Management.• Training.• Occupational Health.
Slide 41Analysts' Site VisitApril 26, 2004
Risk ManagementRisk Management
• Risk Assessments.• Action Plans.• Response Plans.• Risk Audits.• Rescue Team.• Transportation Management.
• Risk Assessments.• Action Plans.• Response Plans.• Risk Audits.• Rescue Team.• Transportation Management.
Slide 42Analysts' Site VisitApril 26, 2004
Stakeholder ProgramsStakeholder Programs
• Communities.• Environmental Committees.• Government.• NGOs.• Universities.• Municipalities.• Regional working groups.
• Communities.• Environmental Committees.• Government.• NGOs.• Universities.• Municipalities.• Regional working groups.
Slide 43Analysts' Site VisitApril 26, 2004
Environmental Committees Environmental Committees
• Created as an official communication channel between CMA and communities– Provide technical environmental information– Receive a feedback from local residents
• Established in:– San Marcos – Ayash Basin– Huarmey– Huallanca
• Created as an official communication channel between CMA and communities– Provide technical environmental information– Receive a feedback from local residents
• Established in:– San Marcos – Ayash Basin– Huarmey– Huallanca
Slide 44Analysts' Site VisitApril 26, 2004
EHS Stakeholder ProgramsWorking Groups
EHS Stakeholder ProgramsWorking Groups
• Regional working groups consisting of mining companies, communities, government, and NGOs:– Grupo de Trabajo PN Huascarán– Consejo Ambiental Regional (CONAM)– TMI, SPDA, VIDA
• Regional working groups consisting of mining companies, communities, government, and NGOs:– Grupo de Trabajo PN Huascarán– Consejo Ambiental Regional (CONAM)– TMI, SPDA, VIDA
Slide 45Analysts' Site VisitApril 26, 2004
Community Development Strategy
Community Development Strategy
• The community leads in planning its development. It is necessary to change attitudes.
• Local Development Committee ( Mesa de Concertación ): includes all the stakeholders, CMA acts as a facilitator
• The community approves the development plan and budget, and monitors its compliance.
• Public consultation used as a tool.• Programs are executed by NGO’s.• Build trust and social capital
• The community leads in planning its development. It is necessary to change attitudes.
• Local Development Committee ( Mesa de Concertación ): includes all the stakeholders, CMA acts as a facilitator
• The community approves the development plan and budget, and monitors its compliance.
• Public consultation used as a tool.• Programs are executed by NGO’s.• Build trust and social capital
Slide 46Analysts' Site VisitApril 26, 2004
Principles of CD ProgramsPrinciples of CD Programs
i Avoid paternalism, through promoting sustainable development.
i Supply tools for individual and collective development.
i Attract Government and multinational agencies contributions.
i Complement, not replace, government responsibilities.
i Respect local culture, habits and values.
i Avoid paternalism, through promoting sustainable development.
i Supply tools for individual and collective development.
i Attract Government and multinational agencies contributions.
i Complement, not replace, government responsibilities.
i Respect local culture, habits and values.
Slide 47Analysts' Site VisitApril 26, 2004
Objectives of CD ProgramsObjectives of CD Programsi Upgrade the quality of life by improving
education and health services.
i Improve agricultural and livestock-raising practices.
i Promotion of small enterprises.
i Support cultural activities.
i Upgrade the quality of life by improving education and health services.
i Improve agricultural and livestock-raising practices.
i Promotion of small enterprises.
i Support cultural activities.
Slide 48Analysts' Site VisitApril 26, 2004
ProductionProduction
Slide 49Analysts' Site VisitApril 26, 2004
Lake SedimentsLake Sediments
• Original schedule was to complete removal of lake sediments by end of Q3 2003.
• Fatal accident in November 2002 required new approach to sediment removal:– Long-line excavator added in March 2003;– Long-line effective but sporadic in first six months
of use.– Revised schedule developed in October 2003 to
complete in June 2004. On track.– Lease dragline added in February 2004.
• Original schedule was to complete removal of lake sediments by end of Q3 2003.
• Fatal accident in November 2002 required new approach to sediment removal:– Long-line excavator added in March 2003;– Long-line effective but sporadic in first six months
of use.– Revised schedule developed in October 2003 to
complete in June 2004. On track.– Lease dragline added in February 2004.
Slide 50Analysts' Site VisitApril 26, 2004
Mine ProductionMine Production
0
5
10
15
20
25
30
35
40
Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04
mill
ion
dm
t
Ore rehandleWaste, expense & rehandleWaste minedOre mined
Slide 51Analysts' Site VisitApril 26, 2004
Daily Milling RateDaily Milling Rate
40
50
60
70
80
90
Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04
000
dmt p
er d
ay
Slide 52Analysts' Site VisitApril 26, 2004
Mill Feed by Ore GroupMill Feed by Ore Group
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04
Cu Only Cu Zn
Slide 53Analysts' Site VisitApril 26, 2004
Head GradesHead Grades
0.75%
1.00%
1.25%
1.50%
1.75%
2.00%
2.25%
Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04
Copper
Zinc
Slide 54Analysts' Site VisitApril 26, 2004
RecoveriesRecoveries
70%
75%
80%
85%
90%
Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04
Copper
Zinc
Slide 55Analysts' Site VisitApril 26, 2004
Payable Metal ProductionPayable Metal Production
50
75
100
125
150
175
200
Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04
mill
ion
lb
s
CopperZinc
Slide 56Analysts' Site VisitApril 26, 2004
C1 Cash CostsC1 Cash Costs
0
5
10
15
20
25
30
35
40
45
50
Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04
¢/pa
yabl
e lb
Cu
sold
Slide 57Analysts' Site VisitApril 26, 2004
StrengthsStrengths
• Long life: 19 years, with upside potential.• Scale: 3rd largest Zn producer, 7th largest Cu
producer.• Project execution:
– Under budget, ahead of schedule.
• Low risk:– Operating above design production rates.– C1 cash costs in lowest quartile.
• Upside on production rates.
• Long life: 19 years, with upside potential.• Scale: 3rd largest Zn producer, 7th largest Cu
producer.• Project execution:
– Under budget, ahead of schedule.
• Low risk:– Operating above design production rates.– C1 cash costs in lowest quartile.
• Upside on production rates.
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