David Garofalo caught some observers off guard when he resigned as president and CEO of Hudbay last December.
But few seemed surprised when the company tapped Alan Hair to replace him.
Hair, formerly based in Flin Flon, had been with HBM&S and Hudbay for two decades, holding a number of senior leadership roles in business development and operations.
In 2012, he became Hudbay’s chief operating officer, responsible for all aspects of company operations. His promotion to the head post effective January 1 left Hudbay “well prepared” to “optimize the safety, environmental and cost performance of our three new mines in this challenging metals market,” said Hudbay chairman W. Warren Holmes.
As Holmes noted, Hair’s ascension to Hudbay’s presidency came at a challenging time for Hudbay and the mining industry in general. It also came as the company worked to chart out its next steps in its traditional heartland of
Flin Flon-Snow Lake.
The Reminder conducted an email interview with Hair this week, focusing on Flin Flon, Snow Lake and what the future holds.
Reminder: At Hudbay’s recent AGM, there was talk of placing Flin Flon’s processing assets on care and maintenance following the closure of two area mines (777 and Reed). At the same time, Hudbay has said it is investigating means of processing non-domestic concentrate in Flin Flon and has no plans to close the metallurgical complex. Can you clarify where you see this situation headed?
Hair: We are assessing our options to identify possible alternatives. If an opportunity emerges that includes the Flin Flon site and will strengthen the company’s performance, that would be given very close consideration. Obviously there is a considerable amount of infrastructure in place there. But most importantly, we want to be clear that we know care and maintenance is what will happen in the event no alternative emerges that is sustainable and economic.
Reminder: I am told by Hudbay employees that the only concentrate the company could buy is zinc for the zinc plant, as the Flin Flon plant does not use or buy any copper concentrate. Is this accurate and, if so, how does that impact Hudbay’s plans for Flin Flon?
Hair: We have no capacity to refine copper concentrate, so yes, our focus is on zinc. When we reach the point Hudbay isn’t producing enough zinc to fully utilize the zinc plant, would we bring in concentrate to process? In theory we could. It would depend on a number of external factors. Is there sufficient concentrate available? What does it cost? There are a number of factors outside Hudbay’s control.
In terms of Hudbay’s plans for Flin Flon – and this is important to stress broadly – this is a work in progress at the present time, so there is no final plan per se, but rather the ongoing effort to develop a plan that is the right way forward. And it is a situation where Hudbay plays a part, but is not the sole actor.
So we are trying to bring together the parties, particularly government, to develop the plan. It is business as usual for the most part, and that requires everybody to focus their efforts to produce the maximum outcome. We have to continue to operate that way until we can’t.
Reminder: In broad terms, what is Hudbay’s long-term plan for Flin Flon and Snow Lake? How does this region fit in with the company’s objectives?
Hair: The company has a long history in Manitoba. It remains an important part of Hudbay and our expectation is there is still opportunity here. It’s hard to imagine the Flin Flon Greenstone Belt isn’t holding something down there.
But the focus is shifting, which was inevitable. Lalor is the focus now and its mine life is estimated at 15 years, so the foreseeable future is clear. It’s a lot of time to possibly develop the assets we have or to find new opportunities.
But at the same time, the economic imperatives are vital and must be a priority to sustain the company during those 15 years. We need to develop long-life, low-cost mines to survive through the downturns in the commodities cycle, and that’s our bottom line.
Reminder: Rob Winton, [then] vice-president, Manitoba Business Unit, has said Hudbay’s potential move toward gold mining and milling in Snow Lake opens up a whole new set of opportunities for the company. How would you characterize those opportunities and the promise they hold for both Snow Lake and
Flin Flon?
Hair: The optimization of Lalor is one of our main priorities. The opportunity with the New Britannia mill [purchased by Hudbay last year] would be to potentially increase gold recoveries and augment existing processing capacity.
The optimization work is currently underway and we expect to complete the engineering studies at some point around the end of the year. When we have something to announce, we’ll announce it.
Reminder: How closely are you following Callinex Mines’ ongoing (and promising) exploration work at the Pine Bay Project near Flin Flon? Do you see any possibility of a joint venture?
Hair: We’re always open to opportunity and we’re always engaging with junior companies who are a big part of unlocking the potential of the region.
Reminder: Foran Mining Corp has said it may want to explore the possibility of a contract with Hudbay to process ore from the former company’s proposed McIlvenna Bay mine outside Creighton. Are you open to such arrangements?
Hair: When we have something to announce, we announce it, so I won’t speculate about the future with any specific company, but I will say Hudbay has a long history of creating business relationships with other companies in the area and our willingness to do that hasn’t changed.
Reminder: Some have speculated that just as Hudbay was once a small junior miner that purchased operations in Flin Flon and Snow Lake, the company has grown to the point that it may be willing to sell its Flin Flon and Snow Lake assets to a fledgling company. Your thoughts?
Hair: Our view of the future sees Hudbay in northern Manitoba. Our present objective is to develop a strong, vibrant operation in Manitoba that is worth more to Hudbay than to any other mining company.
Reminder: Is there anything else you’d like to say?
Hair: This is a tough time for the mining sector broadly. Hudbay isn’t immune to that. It’s no secret last year there was no profit sharing. Or that earlier this year we challenged the entire company – Manitoba, Peru, Arizona and Toronto – to identify efficiencies and savings that would shore up our performance. They rose to that challenge and the results have been encouraging so far.
But the absence of profit-sharing this past year is a symptom of the need for further change to ensure the long-term success of the Manitoba business. I’m confident we’re up to the job so long as we maintain the focus.
