Mining companies are not strangers to violence that can surround their activities in the developing world. In recent weeks, there have been deaths in Indonesia, Peru and now Guatemala during protests related to ongoing or incipient mining.
In Guatemala on Sunday, one person apparently was killed and 13 injured when a long-simmering land issue arose with the new property owners, a local subsidiary of HudBay Minerals Inc., Compania Guatemalteca de Niquel (CGN.) Among those injured were company employees when protesters attacked and damaged a hospital the company runs.
Late this afternoon, HudBay details what had been happening on Sunday.
Discussions had been taking place that day between authorities and illegal occupiers of CGN land known as area 217 in an effort to persuade the occupiers to comply with their commitments under an agreement to relocate. A majority of local families have complied with the resettlement agreement but a few continue to illegally occupy CGN property at this location, the company said.
“HudBay wants to emphasize that no evictions were carried out and none were threatened or intended. The discussions were consistent with HudBay’s strategy of peacefully resolving illegal occupations through dialogue.” it said.
When negotiations ended without resolution, government vehicles departing from area 217 were attacked near the town of El Estor by a separate group of organized protesters.
Protesters stole police weapons
Reports received by CGN, HudBay said, indicate that the protesters also ransacked the local police station and stole weapons, including automatic firearms. Later in the day, they attacked a CGN-sponsored community hospital in El Estor, resulting in extensive damage to the facility and to equipment recently donated by the Hope Alliance.
CGN confirmed that several of its employees were injured during the attack on the hospital. Throughout the attacks, CGN personnel showed great restraint and acted only in self defense, it said. There was no damage reported at the mine site or plant facilities owned by CGN.
Reuters this morning quoted a spokeswoman for CGN saying that the company’s security guards did not carry live ammunition and were forbidden from using their weapons.
It has also been reported that one of the protestors died as a result of gunshot wounds sustained during a confrontation among the protesters.
“We deeply regret the injuries and loss of life that occurred in the El Estor area during the attacks by an organized minority,” said Peter R. Jones, HudBay’s CEO. “Our No. 1 priority is to ensure the safety and security of all residents and employees in El Estor.”
Dozens of community programs
CGN said it is committed to working collaboratively with the local community through various outreach programs to support the development and enhancement of health, education and cultural centers and to increase environmental understanding in the region. It’s not just in El Estor that the HudBay unit is working: The company initiated 66 projects in 20 communities around the Fenix project in health, education, culture and environment.
“The majority of residents in the area support our outreach efforts, investments in the local community and development of the Fenix project,” Jones said. “We remain committed to working with local residents to reach a fair and equitable solution to land claims and resettlement.”
CGN said it still is committed to advancing the development of the Fenix project to reach full production when it is economically viable. Currently, CGN employs about 100 people in Guatemala.
CGN said it intends to cooperate fully with any investigation conducted by authorities in connection with Sunday’s incidents.
Reuters said this morning that the dispute is over a “long-running land dispute” that began well before HudBay acquired the property last year. It reported that the mine’s previous owner had faced extensive opposition to its plans to reopen the mine earlier this decade. In 2004, protestors burned down a hospital and community relations office when plans to reopen the mine were announced, the news service reported.
Acquired Fenix in late 2008
HudBay acquired Fenix when it combined with Skye Resources Inc., a deal that was announced last June and consumated in August. Skye’s principal asset was Fenix, with 41.4 million tonnes of reserves, which HudBay termed “world class.” At the time, HudBay said the “Fenix Project will strategically expand HudBay’s base metals portfolio to include nickel and add significantly to HudBay’s development pipeline.”
Peter Jones, who took over as CEO this March, elected by an entirely new board of directors following considerable upheaval in the company, in July presented Fenix as part of the company’s two-pronged growth strategy. The first part was capitalizing on the firm’s based in Manitoba, he said.
“The strategic plan will only be fully realized by growing beyond our Manitoba base,” Jones added. “This second avenue of growth will include the company’s Fenix nickel property in Guatemala and potential acquisition opportunities worldwide.”
At that time, he promised revised project plan for Fenix in early 2010.
Through its subsidiary, HudBay owns 98.2% of Fenix, a brownfield nickel laterite project. The company said it offers an opportunity to build its nickel output to about 50 million pounds per year. The company now produces copper, zinc, gold and silver from its Canadian operations.
Competitive operating costs
It says that Fenix is expected to have competitive operating costs, long reserve life, and provide both metal and geographic diversification. Environmental and construction permits have been received and detailed engineering is well-advanced.
Although the company has been limiting expenditures at the project because of the economy, it said it continues to explore lower-cost power supply solutions and transportation options and to develop infrastructure, such as upgrading the access road.
A decision on whether to move ahead with Fenix is expected by mid-2010, Jones told an investors’ conference Sept. 24.
The Guatamalan unit also is working with the local community and all levels of government to ensure the project provides benefits to the people of Guatemala, as well as HudBay’s shareholders, it said.
HudBay reaches out to the community in Guatemala by conducting information, liaison and awareness programs in the Fenix vicinity. It also is upgrading a 37-kilometer highway from El Estor to Río Dulce, which should be complete in 2009 at a cost of about $10 million. This will not only be a road for heavy truck traffic to the mine project, but a pathway for communication that benefits local agriculture, commerce and tourist ventures.
HudBay spent $687,000 during 2008 on environmental protection and compliance, including land reclamation, environmental baseline studies and sampling. HudBay’s Guatemalan subsidiary also operates a tree nursery that can deliver up to 40,000 trees annually for reforestation.
Building medical center
In 2008, the company completed the first phase of a medical center to provide health care to the community and through the Raxche΄ Foundation, the company initiated 66 projects in 20 communities around the Fenix project in health, education, culture and environment.
The Fenix operation, on care and maintenance since 1980, is a substantial brownfield nickel laterite mine and processing plant in eastern Guatemala that became part of HudBay as a result of its business combination with Skye Resources in August 2008. A technical report dated Sept. 15, 2007 titled “Technical Report on an Update to the Fenix Project, Izabal Guatemala” is available on SEDAR.
The Fenix deposits are near El Estor in Izabal, Guatemala. The mineral rights to most of the deposits are held under a 25-year renewable exploitation licence with the remainder held under an exploration licence.
Compañia Guatemalteca de Níquel S.A. (CGN), a Guatemalan company, holds both the licences. HMI Nickel Inc. (a wholly owned subsidiary of HudBay Minerals) owns about 98.2% of CGN’s shares, while the Guatemalan government owns the balance of 1.8%. (CGN has its own website, but it’s in Spanish.)
The project’s principal mineral reserves are on the Sierra de Santa Cruz in eastern Guatemala at elevations from 400 to 800 meters above sea level. The nickel laterite ores are formed by intensive tropical weathering of ultramafic rocks. A limonite layer is the top and most intensely weathered layer and the saprolite ore is the lower and less weathered layer with an irregular transitional boundary separating the two.
Reserves good for 30 years
At steady-state operation the mine is expected to provide 1,464,000 tonnes of saprolite and transition ore annually to the process plant. The open-pit mine’s average stripping ratio is expected to be 1.1 tonnes of waste for each tonne of ore mined.
The average grade of the saprolite will be 1.63% over the 30-year mine life, although higher grade is expected to be mined in the early years. The general mining sequence will begin with the removal and storage of soil that will be used for future rehabilitation of the mined areas. Following the removal of the soil the limonite layer will then be removed and placed in previously mined or other designated storage areas.
The transition zone and saprolite ore will then be removed and loaded into off-road haul trucks for transportation to the process plant. The soil will then be replaced over the mined areas and reforested.
The existing 25-million-pound-per-year process plant will be upgraded to about 50 million pounds and the process flowsheet will consist of a coal-fired dryer, two calcine/reduction kilns, a 90-MW electric arc furnace and a ladle refinery to produce a 35% ferro-nickel product.
Plant has been well maintained
The existing process plant was well maintained and many of the components will be reused. The dryer, one kiln and the refinery will be new. The existing furnace will be upgraded with new technology to achieve the required capacity.
Production over the 30-year project life is estimated to be 1.3 billion pounds of nickel. The average production for the first 20 years after start of full production is planed to be 48.5 million pounds per year of nickel contained in ferro-nickel.
Fenix, by the way, is the Spanish version of Phoenix, the mythical bird that burned then rose from the ashes. In the case of HudBay’s Guatamalan nickel project, only time will tell whether such is true.
