COVID-19: Workforce cuts weigh on LatAm mining output

Workforce reductions linked to the COVID-19 pandemic are continuing to weigh on mining operations in key Latin American jurisdictions.

The reductions – required for social distancing and other COVID-19 protocols – are impacting copper, gold and silver mines in Chile, Peru, Mexico and Argentina, according to Q3 filings.

But the affected assets appear to be a small minority.

Many mining companies have reported a rebound in production in Q3 after operations were impacted by COVID-19 suspensions in countries such as Peru and Mexico.

Others, including many top gold miners, have seen relatively modest impacts on production throughout 2020.

IMPACTED OPERATIONS – Q3

1. BHP copper mines

Countries: Chile, Peru

Workforce reductions continue to hamper BHP’s copper mines, with the company forecasting lingering impacts in the coming years.

The company’s Chilean assets were operating with about 30% fewer workers in Q3, with similar levels expected in the current quarter.

Escondida – the company’s key copper asset – saw output slip 3% to 285,000t, with production likely to be affected in 2022 as a result of lower material movement next year resulting from workforce reductions.

“The operating environment remains challenging, with a high degree of uncertainty about the continued impacts from COVID-19 and expected absenteeism levels,” BHP said.

Pampa Norte in Chile and Antamina in Peru saw Q3 copper output down 33% and 8%, respectively, in part due to lower worker numbers.

2. Fresnillo gold mines

Country: Mexico

Fresnillo lowered 2020 gold guidance for the second time as COVID-19 restrictions impacted its Herradura and Noche Buena mines in Mexico.

The company now expects to produce 745,000-775,000oz gold, down from previous revised guidance of 785,000-815,000oz.

The reduction is a result of a reduced number of mine operators at Herradura due to preventive measures to protect vulnerable people, along with lower grades at the dynamic leaching plant, and restricted access to deeper areas at the Noche Buena asset.

3. Hochschild Mining, San José, Pallancata silver mines

Countries: Argentina, Peru

Pandemic-related restrictions on the movement of people in Argentina have resulted in a gradual ramp up of operations at Hochschild’s San José mine, with full production expected toward end-2020.

The restrictions have also prompted a revision to the San José mine plan resulting in lower grades.

The mine, a 51:49 JV with McEwen Mining, produced 2.68Moz silver equivalent in Q3, compared to 4.31Moz in the same quarter last year.

Hochshild also revised its mine plan at Pallancata in Peru following a Q2 suspension. The mine produced 1.36Moz silver equivalent in Q3, down from 2.52Moz in the same quarter last year.

The company reached full production levels at its Inmaculada mine in Peru in the first week of September.

4. Pan American Silver LatAm mines

Countries: Peru, Mexico, Argentina, Bolivia

Pan American CEO Michael Steinmann said in September that COVID-19 continued to affect productivity across its operations, which was around 80% of full levels.

The company announced the resumption of operations at its Huarón and Morococha mines in Peru late last month. The company will issue Q3 results on November 4.

5. Buenaventura, Uchucchacua silver mine

Country: Peru

Buenaventura’s Uchucchacua asset is the only mine operated by the company which has not yet returned to pre-pandemic levels, with production impacted by a shortage of workers required to successfully operate at full capacity, the company said in its Q3 production report.

Of the remaining six Buenaventura-run mines, two were operating at normal levels throughout Q3, with a further two returning to full operations in August and three in September.

6. Sierra Metals, Cusi silver mine

Country: Mexico

While Sierra’s Bolivar and Yauricocha assets in Mexico and Peru had a strong Q3, with output higher than the same period of 2019, Cusi continues to ramp up.

The mine was placed in care and maintenance in April to comply with Mexican lockdown rules and only resumed operations in late July.

“The mine continues to work toward reaching full capacity during 4Q20,” the company said in its Q3 production report on October 14.

7. Great Panther Mining, Topia, Guanajuato silver mines

Country: Mexico

Great Panther’s Guanajuato Mine Complex in Mexico produced 334,675oz silver equivalent in Q3, down 13%

“Operations were maintained throughout the quarter albeit at lower levels of production due to continued spread of COVID-19 in Guanajuato and measures and protocols to safeguard the workforce,” the company said.

Topia in Mexico saw output slip 23% to 383,897oz silver equivalent due to a pandemic-related delay in the delivery of a component for one of the mills.

The component was installed in early October.

The Tucano mine in Brazil saw gold output slip 12% to 31,803oz but the fall was caused by lower grades.