Mine Intelligence

Research Group
(MIRG)

The University of Arizona – Mining and Geological Engineering Department MIRG

MIRG
6th International Industry Summit on MINING PERFORMANCE Achieving Lasting Improvements in the Energy and Minerals Industries
May 14–16, 2013 • Pittsburgh, PA

“Mining investment climate in Peru, a Business

Intelligence perspective”

J A Ardito
S D Dessureault

1
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Agenda
Defining 1

Measuring 2

Analysis 3

Improving: DW/BI 4
Control: Sustainability
Intelligence Suite 5

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Some News & Facts

Conga Project – Newmont
Investment: $ 4.8 billion
Social Investment: $ 150 million
Project Status: Paralyzed

Tia Maria Project – Southern Copper.

Investment: $ 900 million
Social Investment: $ ? million
Project Status: Paralyzed

Santa Ana & Corani Projects –Bear

Creek
Investment: $ 600 million
Social Investment: $ 40 million
Project Status: Santa Ana (Paralyzed)
Corani (with Social License)

Mine Intelligence Research Group Define

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Some News & Facts

Chile Argentina Colombia

Paraguay Panama Mexico

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Measuring 2

Sustainability Issues

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Sustainable development = Responsible Mining

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Developing Indicators to measure progress

Mine Intelligence Research Group Measure

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ICMM SD Principles

Mine Intelligence Research Group Measure

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Social License
• Alongside formal government approvals related to SD indicators
• Can be thought of as society granting a business an informal license to operate
• Business is perceived to be behaving in a socially, culturally and/or environmentally
responsible manner

Current Variability of cost for new mining projects to achieve Social License:

from 100,000 $ to 200,000,000 $

• Main drivers:
1. Community expectations (from indicators: employment, education, health,
safety, etc.)
Currently not 2. Management engagement with SD issues at all levels of leadership
measured, but 3. Political stability of communities and local government
they can 4. Trust

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Analysis 3

The case of Coal Mining in US

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Data Sources – not inclusive

• E*trade • MSHA
• USGS • Infomine
• Standard & Poors • IMF
• Moody's • OECD
• Eurasia Group • IEA
• US Department of Education • FEC
• World Bank • US Census
• EIA (Part of Dept. of Energy) • Bureau of Economic Statistics
• NETL • SNL Energy
• DOE • Web Crawler data
• Political money flow databases
(campaign contributions) Mine Intelligence Research Group
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The University of Arizona – Mining and Geological Engineering Department MIRG
MIRG

Example 1: Rapid Information

Access to Clarify Misinformation

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Per capita personal income 2005 $'s

Per capita personal income $000's

30

25
f(x)
f(x) == 0.27
0.47 xx −− 522.4
921.82
R² = 0.66
20 R² = 0.88
Wyoming per
15 capita income
10 Linear (Wyoming
per capita income)
5

0
1980 1982 1984 1986 1988 1990 1992 1994
Year
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per capita personal income $000's Per capita personal income 2005 $'s
50
40
30 f(x) = 0.54 x − 1045.54 Wyoming Per Capita
R²
f(x)==0.82
0.47 x − 916.88
Income
20 R² = 0.98 Linear (Wyoming Per
Capita Income)
10
0
7 0 7 5 8 0 8 5 90 9 5 0 0 0 5 10
19 19 19 19 1Year 9 19 20 20 20

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Analysis 3

Analysis of Peruvian Mining

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Case Example: Gold Mining in Peru

+ + + +
Newmont
Barrick Up to 1 million ounces, big orebodies
Anglo American

Environmental Protection
Respect to country laws
Community problems

Hochschild
Buenaventura From 100,000 to 1 million ounces, intermediate
Rio Alto size orebodies

CAPEX Intermediate Highly variable range, small orebodies, almost

formal inaccesible
practitioners

Artisanal
miners of Ica, What they find, remote access
Arequipa, Puno
- - and Madre de
- - Dios
Characteristics of the Business
Identification Differentiation

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Tracking the issue

Peruvian Main Exportations – from XIX to XXI centuries

1820

1830
1835

1845
1850
1855
1860

1870

1880

1890
1895

1905
1910

1920

1930
1935

1945
1950
1955
1960

1970
1975
1980
1985

1995

2005
2010
1825

1840

1865

1875

1885

1900

1915

1925

1940

1965

1990

2000

2015
SILVER
GOLD
WOOL
GUANO
SALTPETER
COPPER
COTTON
SUGAR CANE
RUBBER
OIL
LEAD AND ZINC
IRON
INDUSTRIAL FISHING
INDUSTRIAL AGRICULTURE
CLOTHING INDUSTRY

Higher Demand Lower Demand

Source: Modified from PNUD 2006, Human Development Report - Peru

England - Europe US China

Industrialization Industrialization Industrialization

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Tracking the issue

Mining Investments

Peruvian Main Mining Projects – 2012

Expansions For 2012 there are 52 main mining projects in Peru,

totalizing $ 53 billions in investment in the different
stage they are.

All the projects have had to face social issues in

different level of complexity.
With EIA approved

Some of the projects has been paralyzed or delayed.

With EIA submitted

In Exploration

Source: Peruvian Mining Ministry 2012

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Peruvian Mining Claims

Tracking the issue
Cajamarca case Cajamarca case

Source: NGO Cooperaccion Source: Mining Ministry

Misinformation:

Some “mining regions” (with lots of mining claims) have no mines, then there
are neither companies, nor taxes to support communities in a sustainable
framework.

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Informal (Artisanal) Mining

Tracking the issue

High grade
contamination 150,000 illegal
area miners in the
country
(estimation 2013)

Misinformation: Contamination without control. Informal Gold exploitation in amazon basin (Madre de Dios). Such work
affect all the mining industry by means of misinformation. From Carlos Aranda, Environmental Legacies and Mine Closure
in Peru. 3rd Business Meeting Perú-Chile. Sept. 2006.
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Tracking the issue

Mine Taxes & Reduction of Poverty

Peruvian Mining taxes with respect Reduction of Extreme Poverty 2001 - 2010
to Total taxes 1998 – 2009

Source: National Institute of Statistics

Source: Peruvian Institute of Economy

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Improving 4
Control 5

Sustainability Intelligence Suite

DW/BI Application

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Sustainability
Data Sources
Intelligence Suite
Sustainability Intelligence

Analysis: Ad hoc reports /

Quick Factual Responses
Public Governmental Data Sets
DW/BI
Dashboards /
Monitoring engagement
Global Sustainability Indicators

Real time monitoring / Alerts

Social Media (MISOM CS Product)

Data Mining /
In-depth
Modeling /
Complex analytics

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Social Media Analysis

From an universe of social media communications (left) it is possible to identify groups, against , neutral and
supporting (right) and how is their cohesion, organization and support (or lack of it).

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SIS Development using Business Intelligence tools

Baseline formation Social impact modeling

and monitoring

Business Regular
intelligence measurement Environmental impact
tools
modeling and monitoring
Sustainability Impact modeling
Intelligence
Suite Economic impact
Real time listening modeling and monitoring

Initial primary focus

Permitting Brownfield
phase of new expansions
mines
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Conclusions
As for the Coal industry in US, building a SIS identify The case of Peru or any other country facing high
opportunities to improve the socio political analysis. socio-political risk follows.

It is possible to understand and reduce risk The main benefit of a SIS is quantify and visualize
exposure using modern DW/BI techniques. scenarios of conditions of stakeholders

Through SIS characterization, it is possible to

Currently, many mining companies have projects
optimize the allocation of financial resources to
across many regions with diverse stakeholders.
each region.

This analysis is particularly important to new projects with limited stakeholder communication

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THANK YOU

Mine Intelligence Research Group