Underground Contractors

Social distancing measures have accelerated innovation

The underground segment of the mining industry has been growing globally – a natural progression as the low hanging fruit of open-pit ore bodies depletes and miners are forced deeper. However, 2020 represented a spanner in the works for underground mining, which suffered more than its open-pit counterpart as social distancing measures meant operations took longer to ramp back up. In a confined space, and particularly in Peru’s prevalent narrow-vein underground mines, social distancing is a real challenge. On the bright side, nothing spawns innovation like necessity, and the pandemic has accelerated the development and adoption of technology in underground environments.

Gianflavio Carozzi, CEO of Peruvian underground mining contractor AESA, suggested that the willingness of mining companies to implement new technologies to achieve greater productivity is now much higher as a result of the pandemic. “The obligated migration to remote work brought down important paradigms and opened up our minds to change. This, together with safety concerns regarding a concentration of people, encouraged mining operators to reduce the personnel footprint at the mine site,” he said.

Although the move to remote work for some positions started as a necessity, Carozzi suggested that mine operators are now evaluating more aggressively the benefits that a migration of personnel out of the work front can produce by expanding productive hours in the mining cycle and increasing safety with the use of remote and/or automated equipment.

Another of Peru’s main underground contractors, INCIMMET, has been expanding its business in Colombia in recent years, as well as working domestically for clients including Nexa Resources, whose Cerro Lindo operation is Peru’s biggest underground mine. On the subject of innovation, Eduardo Cossio Chirinos, INCIMMET’s CEO, stated that he believes the pandemic has accelerated the desire to change, but there is a big difference between willingness and an actual action plan.

“You first need a desire to invest in infrastructure before you take on the implementation of technology,” said Cossio, reflecting that mining contractors need to look for a balance, because they do not own the mine or make investments into IT infrastructure for the entire mine.

With that in mind, he explained how INCIMMET’s innovation strategy is focused on the short and medium term needs of its clients, without neglecting the big trends in the long term. Justifying this strategy, INCIMMET believes this is how tangible and realistic progress can be made at a mining operation.

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“Situations where companies are forced to embrace certain technologies, such as during this pandemic, are often the catalysts to show first-hand that there are different, and often better ways of doing business. For example, one of the benefits of automation is to keep people out of harm’s way preventing physical injury, but more recently a primary driver for automation has been to reduce the number of people in certain environments.”

Paul Murphy, Manager – South America, Mining Plus

Paul Murphy, manager of the South American region for Mining Plus, echoed the sentiment that Covid has accelerated the adoption of technology at underground mine sites: “Situations where companies are forced to embrace certain technologies, such as during this pandemic, are often the catalysts to show first-hand that there are different, and often better ways of doing business.”

Elaborating, Murphy added: “For example, one of the benefits of automation is to keep people out of harm’s way preventing physical injury, but more recently a primary driver for automation has been to reduce the number of people in certain environments.”

Mining Plus’s parent company, Australian underground mining contractor Byrnecut, is targeting growth in the Americas after establishing its reputation as a leading contract miner for large-scale underground projects in Australia and Africa, according to Greg Jackson, managing director of Byrnecut Offshore.

The company has a partnership with Peruvian contractor, San Martín, in preparation for the transition to larger underground operations that is taking place in South America. The poster child for such projects in Latam is Codelco’s Chuquicamata, which started underground operations in 2019 to exploit the remaining resources located below the current ore deposit until 2058.

The majority of Peru’s iconic mines in recent years have been open-pit operations, such as Antamina, Las Bambas, Cerro Verde and Toquepala. Underground mining still represents a large portion of production in Peru, but that generally comes from medium-sized operations such as El Brocal, Cerro Lindo and Condestable.

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Mining methods that drive down costs and allow for bulk mining lower grade material, such as large open stopes, sub level caves and block caves, are Byrnecut’s specialty, and Jackson elaborated on the type of opportunities he sees in the Americas: “Yanacocha in Peru, transitioning from oxides at surface to sulfides underground, or Newcrest’s Red Chris in Canada, which could be a large block cave, are examples of the type of deposits that lend themselves to bulk mining methods.”

The planned construction of the Newmont-operated US$2 billion Yanacocha Sulfides project marks the start of underground mining on a greater scale in Peru. However, the news that the construction decision had been delayed, in part because of political uncertainty, is a blow to the industry.

This also raises the question of how the underground industry could grow under a Castillo government? On one hand, mining companies and banks may be reluctant to invest in large-capex projects, depending on whether anti-mining rhetoric results in meaningful changes. On the other hand, small and medium-sized underground operations, which have been Peru’s bread and butter, generally involve less environmental impact than larger open-pit projects. While it is still too early to tell how the following months and years will play out, companies which focus on improvements through the use of technology can at least guarantee to maximize productivity from their current operations.

Image courtesy of 3M