Could you introduce us to the Sierra Gorda mining project?
Sierra Gorda is a stand-alone project operating as a joint venture with KGHM, the Polish copper mining company, owning 55%, and South32, the multi-metal Australian mining company, owning 45%. We are located in Antofagasta, Chile, the country’s biggest mining region, and amongst the biggest copper mining regions globally. It is also the driest area in the world. We operate at 1700 meters above sea-level. We are a low-grade mining company: we process copper of an average grade below 0.4%. We presently produce half or a third of what a traditional big copper mine produces at the same throughput. Our cost per pound of copper, therefore, should be much higher than average, but we stay competitive though efficient management. In terms of throughput, at Sierra Gorda we are probably among the top 10 mining projects globally, but if you consider copper production, we are among the top 30. This is part of our challenge: we think of ourselves as the mining mine of the future, because ore grades are decreasing globally.
What are some of the technological innovations in your mining processes you are proud of?
Our plant was designed with High Pressure Grinding Rolls, which are 20% more energy efficient than the conventional SAG mill. Additionally, we use 100% seawater directly in our processes, meaning that we do not have to desalinate, nor do we compete for water with the local population.
Not desalinating comes with a few benefits. First off, we do not have to discard the brine that is usually leftover. This means we do not need to reintroduce salt into the sea after processing. Secondly, we use up less energy. Thirdly, we do not produce the waste that desalination plants usually do. Finally, there is a benefit enjoyed at the end of the process, specifically in relation to the crust formed by the salt on the operation surface: it decreases the air pollution produced by the tailings significantly.
But, of course, not desalinating the water constitutes a challenge for both our processing, as well as our maintenance, since you must find ways to avoid corrosion.
We are also introducing new AI and autonomous technologies into our operations. For instance, we now have autonomous drilling machines that are not human operated, but supervised by people in the control room. We have also developed interesting AI applications to enhance our predictive maintenance. At our warehouses we have deployed a robot that does our stock management, being the first of its kind in Latin America. It verifies that the quantities in the stock are aligned with the data in our ERP system, ensuring that we do not unwittingly run out of spare parts. Our robot does in 20 minutes what before took our operators as much as 12 hours daily.
How many people do you employ at Sierra Gorda presently and is the robot threatening to take their jobs?
Sierra Gorda has 1450 of its own employees, plus 2500 on-site contractors. The people who did what the robot now does in stock counting are now working on the preservation of equipment, meaning that we did not eliminate any jobs. Instead, they now work on something that brings more added value. We followed a similar principle with regards to the autonomous drilling machines: the people who operated them are now in the control rooms.
What issues would you like to address in the near future in order to make the company more sustainable from a human and environmental perspective?
We are one of the first mining companies in Chile to transition into renewable energy. In 2021 and 2022 our use of renewable energy was at around 40%, and this year we have increased that to 100%. Accordingly, we reduced direct and indirect emissions of CO2 by 1 million tons between 2020 and now. Add to that the absence of any continental water footprint.
Interestingly, we are now waiting for our manufacturers to release green hydrogen solutions, which would be a strong possibility in Chile given the availability of renewable energy. We are also projecting new ways of electrifying our operations, however, the technology is not fully available yet—the new batteries, for example.
But, at the same time, we must wait for the new standards to come out, since these novel technological developments will compete with each other—for instance, green hydrogen against batteries. We are still unsure about which one is superior, but all in all, the trend indicates that the industry is going in the desirable direction.
Let me add that in 2022 we were the second safest mine in Chile. Our TRIFR (Total Recordable Injury Frequency Rate for a million hours of work)—which indicates the rate of accidents on site—was at 0.85. This shows that the enhancement of our sustainable practices comes with an improvement in our discipline and safety levels.
How confident do you feel at the moment with Chile’s regulatory and political framework surrounding copper mining?
Recently the Chilean parliament adopted new mining royalty. We will see within next years if the elevated tax burden affected the level of investment and the volume of copper production. The loss of competitiveness of Chile was the main preoccupation of the industry when discussing the tax reform.
Since the mining industry entails an economic advantage for the Chilean state, even more now that the new royalty law was passed, we wish to see more mining-friendly policymaking, especially for low grade copper mining which is mining of future.
What are your expectations in terms of the global demand for copper and what are your aspirations for Sierra Gorda for the coming few years?
We know that the world will require a doubling in copper supply if it wants to reach the climate goals of the Paris agreement. The world will be hungry for green copper.
So, we are quite optimistic and believe we are well positioned in light of this transition. That is the reason we are considering new projects to expand the capacity of the existing plant.
