Buenaventura Builds On Their 65 Year Mining LegacyTuesday, December 04, 2018
Globe 24-7’s James Sawyer meets with Victor Gobitz, President & CEO of Peru’s largest publicly traded precious metals company, Compañia de Minas Buenaventura (NYSE: BVN), to discuss Señor Gobitz’s outlook on mining and vision for Buenaventura.
Diversified mineral portfolio, strong operating assets, geopolitically safe locale, long-term business plan, and cost saving focus – Buenaventura eyes the future as innovation and expansion projects progress.
Compañía de Minas Buenaventura S.A.A. is Peru’s largest, publicly traded, precious metals company and a major holder of mining rights in Peru. The Company is engaged in the mining, processing, development and exploration of gold, silver, and other metals via wholly owned mines as well as through its participation in joint exploration projects.
Globe 24-7 is a Human Resources Consulting firm that specialises in talent acquisition and human resources solutions for the global mining industry. Globe has been in operation for fifteen years and has staff in 15 countries servicing small, mid-tier and large-scale mining companies through its project recruitment, search, HR consulting and HR Systems divisions.
Señor Gobitz, Buenaventura has a 65-year legacy in mining – what role has your Peruvian jurisdiction played in the success of the company?
100% of Buenaventura’s assets are in Peru; this country has a long tradition of mining and is a friendly place for us to do business. We have significant assets in terms of production and reserves; 5 different metals: gold, silver, copper, zinc, and lead. We are the world’s second largest producer for each of silver, copper, and zinc. In Peru, we have a leading position with these 5 metals. Chile is different – they are 90% copper. Brazil is different – they have a leading position with iron ore. However, in Peru – we have a mix.
“…5 different metals: gold, silver, copper, zinc, and lead.”
From a macro-economic perspective, Peru is a country with investment grade; like Mexico, Colombia, and Chile. Over the last 10 years, we have seen Peruvian GDP numbers grow well; we have also seen inflation rates stay low. These are better numbers in comparison to Argentina, Brazil, Mexico, and even Chile and Columbia. This creates a good environment for us in Peru.
As you mentioned James, we have had 65 years in Peru to establish ourselves. We have JV’s with groups like Newmont (Yanacocha), Freeport McMoRan (Cerro Verde), Sumitomo Corp., and Southern Copper. We have been called the partner of choice in Peru. [warm chuckle]
“…65 years in Peru to establish ourselves… JV’s with… Newmont… Freeport…”
The long mining tradition in Peru has given us a robust legal framework, impressive academic institutions, and supportive contractors, suppliers, and consultants. Peru is a very friendly place to do business – especially mining business. [big smile]
You have an impressive project pipeline and there are assets coming online – what are you most excited about?
“Peru is a very friendly place to do business – especially mining business.”
The biggest project in our portfolio is related to base metals, Trapiche; it is a copper deposit. We have decided to develop this project in stages. The first stage, we will develop the upper part of the ore body in order to produce copper cathodes. Below it is a huge sulphide deposit which could allow us to be disruptive and change the dimension of the project.
Rio Seco, a second project, also relates to base metals. We are running pilot tests and developing new technology there, a chemical plant located in the northern part of Lima our capital. At this plant, we remove arsenic from copper concentrates. Our developing methodology could also be disruptive because in the northern part of Peru, there are many copper deposits with high concentrations of arsenic which make processing a challenge. This technology will allow us to unlock the value in these deposits.
“…a huge sulphide deposit which could allow us to be disruptive…”
Photo courtesy of Buenaventura.
You have operating assets with major de-bottlenecking projects underway – what improvement opportunities have you identified at Buenaventura?
At Buenaventura we have 11 different operating assets in our portfolio. 9 of these 11 operating assets are operated by Buenaventura; the other 2 are Yanacocha – a JV with Newmont, and Cerro Verde – a JV with Freeport. From the 9 that we operate, we found that in 4 of our biggest underground mines, there are opportunities to invest and improve the infrastructure – ventilation, hoisting, and haulage.
We have good assets; but some have a short life-of-mine. We have to invest to change our mining infrastructure, to reduce production cost, and to increase the visibility in terms of ore reserves.
“…in 4 of our biggest underground mines, there are opportunities…”
Do you see a future of expansion outside of Peru – maybe to Canada, the USA, or Australia?
Yes; it is important we take care and look at things in stages. We have to take advantage of our capabilities and knowledge in the region. For example, we share the same languages and some culture within our region. Our first steps would be Chile, Colombia, and Mexico. There are traditions of mining here. Macroeconomically, these are very stable places too. Argentina could be on the list, but right now it, and places like Venezuela, are not as appealing to us.
What does in seem that investors are looking for today in a miner?
In the case of Buenaventura’s investors, they are looking for a long-term business plan. In addition to the de-bottlenecking projects, we are increasing our exploration programs to gain more visibility into our current assets. We are in a good place, we have a lot of experience, and we have a diverse portfolio of projects; it is important that we also have a long-term business plan.
“In addition to the de-bottlenecking projects, we are increasing our exploration programs to gain more visibility into our current assets.”
What type of talent is the most challenging for you to acquire?
In the case of Buenaventura, Underground Miners. A lot of young talent goes to open pits. Finding the right people with underground experience is a challenge.
With the retiring baby boomer generation, are you feeling any effects at Buenaventura?
Not in Peru; we have a very young population.
My team at Globe 24-7 supports miners with talent acquisition and HR consulting – for both start-up projects and large-scale operating miners – what is your view on outsourcing the HR function and sharing the same service team among several miners to keep costs low? Where do you think this type of support is most valuable?
To outsource all HR is a new idea. As you know, we use 3rd party companies to hire people. The value your team adds can also be huge in new jurisdictions like Colombia, where policy, procedure, and talent acquisition practices are not as well known. Colombia does not have as much past-experience in mining. Your knowledge and services would be very useful in a new country [to mining] like Colombia or Ecuador. They have huge potential to be mining jurisdictions and don’t have a lot of experience.
That answer makes me glad that we have a Globe 24-7 office in Colombia. [both laugh]
As an industry we struggle with branding – who we are, what we do; the more we share our stories with the outside world, the better it is for our industry; not just to attract talent, but to attract investment, and innovation as well. What are your thoughts on enhancing the image of modern mining?
The mining industry is a pillar – economically, and in terms of local jobs. In Peru, we are in the highlands – we generate local jobs and it is important for rural communities. We have brought in new management and each person has brought new ideas to contribute to Buenaventura. We are going to see growth in the coming years, this will benefit our communities and that helps to enhance the image of the mining industry.
“We are going to see growth in the coming years…”
We have also hosted advanced business schools at our mine site – like Rotman, University of Toronto. This is part of our effort to engage professionals in mining. I know you are doing your MBA at Rotman right now James – this is a very good school; very reputable. It is important to us that we share the realities of mining with the public as well as current and future leaders in business.
You are involved with many community groups outside of work; how do you manage your schedule?
With a good team; I have a very good team. [big smile]
What is your prediction on gold price?
In the coming 2 years, I think we will see around the same gold price as now; $1200/oz. We need to think in new ways to reduce cost. It is important that we do what we can to reduce cost. I do not see prices moving much from $1,200/oz over the next 2 to 3 years. This is why we believe that our diverse portfolio, safe mining jurisdiction, long-term business plan, and cost management practices are important for Buenaventura’s continued success in mining.
“It is important that we do what we can to reduce cost.”
Photo courtesy of Buenaventura.
James Sawyer – Business Development Executive