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Johannesburg-based Gold Fields is advancing with two projects in South America, extending the life of the Cerro Corona mine in Cajamarca, Peru to 2030, and the Salares Norte project in Chile’s Atacama region.
BNamericas talked to Luis Rivera, executive VP for the Americas at Gold Fields, about how the pandemic affected the Peruvian operation as well as the Chilean gold project, what kind of changes the company has implemented amid the digital transformation of the industry and how the company sees the copper price outlook.
BNamericas: What has been the pandemic’s effect on Salares Norte and Cerro Corona?
Rivera: Since March, as a consequence of the pandemic and government restrictions, we've been coordinating with health authorities in Peru, but once we received permits operations resumed and now we’re 100% operational.
In Chile it was the same. Despite the pandemic, in October we started pioneering works at [Salares Norte]. We also finished the first phase of the mine camp which has capacity for 750 people and started work on phase 2. That must be finished at the beginning of 1Q21.
BNamericas: The workforce was reduced during the pandemic?
Rivera: Yes. We had an impact in March and April because camps weren’t prepared for social distancing protocols. We had to temporarily reduce our workforce, but we didn’t fire people.
We decided to maintain the workforce, salaries and contractors’ payments even if they weren’t working with us. First of all, out of respect for them, and secondly because we’ll need to mobilize them to come back.
We must have them ready, so we started to give PCR tests to 100% of workers.
Today we maintain health protocols recommended by authorities and camps also have them. It isn’t allowed to have more than two people per room and beds are separated by screen divisions.
The use of private flights has allowed us to operate at 100% in Peru.
BNamericas: Were work shifts extended at Cerro Corona to guarantee operational continuity?
Rivera: We implemented cell work, which means that workers were working in isolation, having contact only with other workers of the same shift. Even on the buses they travelled only with their direct colleagues.
We extended shifts from 4x3 [four days work and three days rest] to 8x7 to 14x7. At the beginning we had shifts of 20x10.
BNamericas: How much has it cost to adapt facilities to the new health protocols?
Rivera: The Cerro Corona camp in Cajamarca has cost US$4mn. To that we must add US$3mn in molecular [PCR] testing of all our workers going to the mines and then going to their homes.
In Chile the cost was around US$2mn.
BNamericas: Is this a good moment for Gold Fields to invest in organic growth?
Rivera: Yes. We’ve now learned how to live with the pandemic. We’re doing healthy mining with no infections at our facilities. So, we’ve resumed exploration and organic growth activities.
In Chile, in September we started an exploration program at the Horizonte project to the south of Salares Norte.
In Peru, we started to build dumps as part of the [Cerro Corona] mine life extension to 2030.
BNamericas: Is Gold Fields interested only in gold?
Rivera: In both countries we’re interested in gold, copper and other metals, but the main condition is that [projects] must have an important gold compound.
BNamericas: Considering Chile’s social unrest last year and the current debate on a new constitution, does the country continue to be attractive for investment?
Rivera: Chile’s geological potential, the same as Peru, make both very attractive.
Chilean regulation is one of the most stable worldwide and we believe that current events are part of the democratic environment’s natural evolution, but they will result in more stability in the future.
We look upon the country favorably and believe it’s a good place to invest.
BNamericas: Is Gold Fields making efforts on sustainability and digital transformation?
Rivera: At the beginning of the pandemic, with support of energy company Engie, we tested electric buses for transportation of our Peruvian workforce.
In Chile we’re implementing a 2MW photovoltaic farm that will cover 10% of Salares Norte energy requirements at the beginning.
BNamericas: And regarding digital transformation?
Rivera: In Peru we closed 100% of our offices. The mine is controlled from the operators’ homes and meetings are being held virtually. Even the mine-site supervision and dispatch are done remotely.
In Chile we aren’t yet operating, but we’ll do it from an operations center in Santiago, 800km from the mine. Salares Norte will be a 100% digitized operation.
BNamericas: Moving the Peruvian mine to operators’ homes was a challenge?
Rivera: Yes. The management was a challenge because the communications network wasn’t ready. Domestic networks weren’t prepared neither.
But today we’re operating at 100% and I believe those changes will stay.
BNamericas: Gold Fields has the lowest costs worldwide. How was that achieved?
Rivera: Our costs are below US$1,000/oz. South America’s advantage, first in Peru and then in Chile, is that we have very good deposits and that helps with prices. Cerro Corona is a gold-copper porphyry with high grades and access to energy and water. Besides that, we use modern mining mechanisms. The mine works with an automatic equipment dispatcher, the [processing] plant uses smart systems, and we have dynamic logistics at the port.
BNamericas: On gold prices, what’s expected for the industry?
Rivera: Depending on the current global health crisis, the gold price scenario is good. Gold continues to be a safe heaven and despite its ups and downs [it has been dropping in the last few days] it is expected to reach new records in 2021.
BNamericas: What price is Gold Fields using for its long-term forecasts?
Rivera: We usually use lower prices, around US$1,300/oz, but it’s a conservative price. Within the market, mining companies are using over US$1,600.