WHAT
GUIDES US
2018 ANNUAL AND CSR REPORT
Hudbay 2018 Annual and CSR Report
TABLE OF CONTENTS
CEO Message
CEO Message
Our Feature Stories
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
Our Company
Business and Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
About This Report
Contact Us
Glossary
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Hudbay strives to create sustainable value; it’s a goal we
have met for more than 90 years. In everything we do,
we are guided by our mission, our experience, our values
and our people. This guidance enabled our performance
in 2018 and is why today we look forward to an era of
transformative development that will deliver value for
years to come.
OUR FEATURE STORIES
Rosemont Project: Planning for the Future
Reed Mine: A Culture of Stewardship from Construction to Closure
Constancia Land Package: Expanding Our Pipeline
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7
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CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
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CEO MESSAGE
A RECORD YEAR IN PERU
We achieved record mill throughput at Constancia in
2018 and, as a result of metallurgical initiatives, we
were also able to deliver record-level copper
recoveries. Over the course of the year, Peru produced
122,178 tonnes of copper and 63,187 ounces of gold-
precious metals. The molybdenum plant, operating at a
significantly higher rate than previous years, produced
904 tonnes of molybdenum.
All of this was done while keeping a close eye on costs.
Among its peers, including some that are two or three
times its size, Constancia is currently the lowest cost
open pit copper sulphide mine in South America.1
Another defining strength of our operations in Peru is
strong relations with our employees. We have a three-
year labour agreement with the union in Peru, where
one-year agreements are typical. This helps us manage
both risks and costs.
Good labour relations are an outgrowth of good
community relations, which have been a priority at
Constancia from day one. Building strong, trust-based
relationships with the people and communities adjacent
to our operations, and with all levels of government, has
provided us with labour peace (which not all mines in the
region enjoy) and will provide a strong foundation for
expanding our activities in the area.
We delivered these results while maintaining strong
safety performance at all of our operations. In Manitoba,
our safety record improved compared to the previous
year, with our lost time accident (LTA) frequency and lost
time accident severity both down by 0.2. At our Peru
Business Unit, we had only two lost time accidents,
related to hand injuries sustained by contractors.
However, good results are not perfect results, and with
safety that is our goal; we continue to invest in incident
reviews, in enhanced systems and in better training to
improve our safety performance. At year’s end, we had
generated $479.6 million in cash and reduced our net
debt to $465.5 million. We were able to achieve these
results while maintaining strong safety performance at
all of our mines, which is always a priority for Hudbay.
ROSEMONT REACHES A MILESTONE
On March 8, 2019, we were very pleased to announce
that the US Army Corps of Engineers had issued a
Section 404 Water Permit (the 404 Permit) for Hudbay’s
Rosemont project. This was the last milestone in a
permitting process that involved 17 co-operating
agencies at various levels of government, 16 hearings,
over 1,000 studies and 245 days of public comment
resulting in more than 43,000 comments. On March 21,
the US Forest Service, which had already issued its Final
Record of Decision in favour of the project, officially
approved Rosemont’s Mine Plan of Operations.
With the Mine Plan of Operations in hand, we can move
forward with developing a modern mine that will fulfill
the requirements of its permits, create jobs and provide
benefits for all of our stakeholders. Once it is fully
operational, Rosemont is expected to account for 10%
of US copper production. It will be a long-life, low-cost
mine, built and operated by Hudbay, that perfectly
embodies our strategy and our strengths.
In 2018, Hudbay delivered strong
operational results, including copper
production that exceeded our
guidance range for the year. We
were also able to incorporate
process improvements at each of
our operating business units that
drove additional efficiencies in our
operations.
1 Source: Wood Mackenzie dataset.
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This is vital, because in 2018 we consolidated the mineral
rights around the Constancia mine, giving us mineral
claims to some very prospective properties that were of
interest to the Company even before we acquired the
Constancia property in 2011. Currently, we are in
discussion with various community groups concerning
surface rights in areas around Pampacancha and
Constancia. These discussions are proceeding amicably,
and we have already reached agreements with two
communities. In addition to our exploration activities, we
are also pursuing opportunities in Chile, the world’s
leading copper-producing nation and a highly attractive
jurisdiction for miners.
CHANGING FOCUS IN MANITOBA
In Manitoba, we were confronted by some operating
challenges at the beginning of the year, but we were
able to address them and achieve our 2018 production
guidance for copper, zinc and precious metals.
In October, we completed the closure of the Reed mine,
under budget and ahead of schedule. From start to
finish, Reed can serve as a model for successful,
sustainable mining in an environmentally sensitive area.
We also announced the closure date for several key
operations in Flin Flon as well as the transition of our
operational focus to Lalor and the Snow Lake belt.
At Lalor, we released a new mine plan and updated
reserves and resources incorporating the gold zone and
the reopening of the New Britannia mill. We completed
several trade-off studies and conducted test mining of
the gold zone to confirm our understanding of the
deposit, and we concluded that refurbishing New
Britannia is the most efficient and cost-effective choice
for processing the Lalor gold and copper-gold zones.
Related to these efforts, we advanced sampling and
survey efforts to better understand the opportunities
for copper and gold exploration available to us in the
Snow Lake belt.
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We recently discovered a new deposit located between
the Lalor mine and the old Chisel North mine in the
Chisel basin in Snow Lake. The deposit has high-grade
zinc and gold intersections, which demonstrates the
regional potential in Manitoba and our strong
exploration expertise.
We are committed to supporting Flin Flon throughout this
process and to being open and transparent every step of
the way. Our relationship with the town goes back over
90 years, a remarkable achievement in any industry, but
especially in the resource sector. Our ties to Flin Flon are
both deep and personal, and we are determined to do our
best by the community and its people.
SUPPORTING TRANSITIONS
IN FLIN FLON
We informed our employees that the 777 mine would
close in 2022, along with operations at the Flin Flon mill
and the zinc plant. We made exhaustive efforts to find
options that would allow us to continue operations, but
they were not successful. Consequently, our focus
becomes reducing the impact of these closures; finding
opportunities for Flin Flon employees at Lalor and Snow
Lake; and helping both employees and the community
manage this transition.
BUILDING OUR DEVELOPMENT
PIPELINE
One of the biggest challenges for any company in the
resource sector is building a robust development
pipeline. The acquisition of the Ann Mason deposit, a
high-quality copper resource in Nevada, the
consolidation of prospective properties around
Constancia, and our efforts in other regions all help
position Hudbay to meet the long-term needs of the
Company and its stakeholders with a development
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pipeline that exceeds 800,000 hectares under
management. Our exploration budget for 2019 is $40
million, and we are pursuing exploration activities
in Manitoba, British Columbia, Nevada, Peru and Chile.
Demand for copper is expected to increase in the
coming years, and, at present, there is not adequate
supply to meet that demand. With the assets we have
in production, in early development or awaiting
development, Hudbay is well placed to meet the
future’s growing need for copper.
ADDRESSING CONCERNS
I must also note that, in the fall, a shareholder raised a
series of concerns that led to a proxy contest prior to
our recent annual general meeting. Following the
achievement of a number of business milestones and
based on the input of many of our shareholders, we
reached a settlement agreement with the shareholder
that provided for a continuation of our ongoing board
refreshment process. I am pleased with the strong
support that shareholders expressed for our management
team and Hudbay’s strategy, and am confident that we
are well placed to continue to deliver value for all of
our stakeholders.
STRENGTHENING OUR ORGANIZATION
The management theorist Peter Drucker once remarked
that “culture eats strategy for breakfast.” Over the last
several years, Hudbay has been working in a variety of
ways to strengthen and enhance our organizational
culture, across all of our operations, so that it better
supports the execution of our strategy through our
people. These efforts include the establishment of a
requisite organizational structure at Hudbay, and led
to the introduction of a refreshed mission and vision
supported by our values of dignity and respect, caring,
openness and trustworthiness. These values guide our
decisions from the perspectives of both our internal and
external stakeholders.
We also believe that inclusiveness and diversity make us
a better company by providing Hudbay with access to
the full range of talent available to us. We have
community outreach efforts everywhere we operate as
well as programs aimed at helping our employees
improve and expand their skills. We are also signatories
to the 30% Club and the Catalyst Accord, and share their
goal of having at least 30% female representation at the
board and C-suite levels by 2022.
impact. Our focus on community in both Manitoba
and Peru has allowed Hudbay to enjoy productive
relationships with our neighbours. Collectively, these
steps help benefit society at large; they also benefit
Hudbay directly by making us a better investment, a
better partner, a better employer and a better company.
LOOKING FORWARD
The receipt of the 404 Permit allows us to start 2019 on
a high note. It also reminds us to have confidence both in
our capabilities and in the permitting process. Drawing
upon skills and knowledge gained in Manitoba and Peru,
Rosemont will be a transformational project for Hudbay.
It is expected to increase our copper-equivalent
production by 50% in the next five years. It will also
enable Hudbay to set a new bar for sustainable mine
building and operation.
We end 2018 and begin 2019 very well positioned for
the future.
In closing, I would like to thank our Board and my
colleagues throughout Hudbay for their support of
our strategy and their hard work and commitment
throughout the year.
THE BENEFITS OF RESPONSIBLE MINING
Sincerely,
Hudbay has a long history of operating in a socially
responsible way. This approach aligns with the values
that define our culture and is essential for the continued
success of our business. Increasingly, we are seeing
that large institutional investors are only interested in
companies with strong records in the areas of
environmental, social and governance (ESG) performance.
Our commitment to ESG was demonstrated when Hudbay
was placed among the top 50 in The Globe and Mail’s
2018 Board Games Corporate Governance Ranking.
The plan for our Rosemont project includes many
sector-leading innovations to reduce its environmental
Alan Hair
President and Chief Executive Officer
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STORY
ROSEMONT
PROJECT:
PLANNING FOR
THE FUTURE
On March 8, 2019, the US Army Corps of Engineers
issued a Section 404 Water Permit for Hudbay’s
Rosemont copper project near Tucson, Arizona.
Receipt of the permit marks a major milestone in an
exceptionally thorough permitting and public review
process that took place over the course of 12 years and
involved 17 governmental agencies, more than
1,000 studies, and an extensive public comment period
that generated more than 43,000 comments.
Having received, on March 21, approval from the US
Forest Service of Rosemont’s Mine Plan of Operations –
which reflect the positive impact the review process has
had on the mine’s layout and operational plan – Hudbay
can now begin developing the mine. Once fully
operational, Rosemont will be the third-largest copper
mine in the United States, accounting for 10% of the
country’s annual copper production. Over a projected
life of mine, currently estimated at 19 years, Rosemont is
expected to produce approximately 127,000 tonnes of
copper annually.
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Rosemont’s final environmental impact statement
(EIS) exceeded 2,600 pages, detailing the specific
requirements necessary to mitigate the project’s
impacts. The subsequent Mine Plan of Operations, at
more than 4,000 pages, details the sound environmental
management practices and advanced mining techniques
Rosemont will operate under with respect to
sustainability, notably in the areas of managing water
and tailings, monitoring and mitigating environmental
impacts, and making a positive and lasting contribution
to communities near Rosemont.
Our goal, and our expectation, is that Rosemont will
establish a new standard in the industry for how to more
sustainably mine copper – a metal that is essential to
sustaining and improving society.
Replacing 100% of the Water Used
Water is a precious resource in the American
Southwest, and it is also essential for many mining
processes. Our water management approach at
Rosemont is guided by the principles of “reduce,
reuse and replace”, and is expected to result in water
consumption that will be among the lowest in the
world per pound of copper produced.
We have voluntarily committed to replace all the water
used at the operation, and, as of the end of 2018, we have
already purchased and stored approximately nine years’
worth of water (around 45,000 acre-feet) in the Avra Valley
and Lower Santa Cruz storage facilities of the Tucson
Active Management Area. This water will be returned to
the Rosemont-area aquifer, via recharge of the Central
Arizona Project (CAP) water. Rosemont is supporting a
$28 million project with Community Water Company of
Green Valley to build an eight-mile pipeline and water
recharge facility that will bring CAP water to the region.
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Rosemont will also be a zero-discharge site, meaning
the water used in processing will remain on site to be
recycled and reused.
Among the initiatives and commitments related to water
quality are programs to protect residential wells for
those living within the vicinity of the project and those
near production wells operating for Rosemont. In
addition to monitoring area wells and surface water,
Rosemont will carefully evaluate and manage
stormwater and runoff water from our operations to
minimize any adverse impacts.
Rosemont will employ numerous technologies and
processes to reduce its water consumption, with one of
the more innovative being the use of dry-stack tailings.
Dry-Stack Tailings – Reduces Water
Consumption, Footprint and Risk
After copper-bearing ore has been mined, it goes
through a series of processes – grinding, crushing and
mixing with water – to separate the copper from the rest
of the rock. After the copper has been extracted, what
remains looks like fine mud or silt, called “tailings”.
Managing tailings in a responsible, sustainable way is a
key consideration for every mine. At Rosemont, instead
of conventional tailings ponds, we will use dry-stack
tailings. This approach, ideally suited for a dry climate
like Arizona’s, uses 50% to 60% less water than similarly
sized mines, has a smaller footprint, is more stable, poses
no threat to groundwater through seepage and allows
for easier land reclamation and rehabilitation.
With the dry-stack method, about 85% of the water is
mechanically filtered out of the tailings, leaving a
material that resembles damp sand. The water extracted
through this process will be reclaimed and reused for
mining purposes.
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Waste rock (the non–ore bearing rock) will be used to
construct a buttress around the dry-stack tailings facility.
Tailings are spread out on the prepared storage area,
and as new tailings are generated, they are spread or
stacked on existing tailings, forming an exceptionally
stable bed. As this bed rises, the height of the waste rock
barrier will also be increased to contain it. When mining
operations cease, the dry-stack enclosure will be
completely covered with waste rock and soil, and then
contoured and planted so that the enclosure blends with
the surrounding natural landscape.
Conservation Tailored for the Distinct Area
The Rosemont project will take innovative steps to
preserve and protect local plant and animal populations.
For example, we will conduct “camera trapping”,
covering a 200-square-kilometre site with sensor-
equipped cameras that are capable of capturing animal
movements day and night. Images from the cameras will
be reviewed regularly by a trained biologist, and the
findings will be shared with Hudbay and the relevant
regulatory agencies.
To minimize visual impacts from the road and
surrounding areas and support ongoing reclamation, the
remaining waste rock will be stored behind a buttress
near the facility. The barrier will be covered with soil and
revegetated with plants native to the area.
Habitat restoration programs for birds and aquatic
animals include monitoring the range of an Arizona-
specific breed of orchid and the habitat it relies on,
protecting bat roosts, providing US$4.25 million in
funding to agencies to create or maintain habitat on
public lands nearby, and numerous other activities that
contribute to species preservation and biodiversity.
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Designed to Protect the Past and the Future
Once we begin developing Rosemont, archaeologists
will come to the site before any construction activities
commence, and they will support the operation
throughout its mine life to ensure we catalogue and
manage any historically and culturally significant findings
or sites on the property.
The robust permitting and public comment period for
Rosemont provided us with a greater understanding of
nearby communities’ priorities, and these are reflected
in Rosemont’s numerous commitments to contribute to
the region’s long-term economic prosperity and well-
being. Examples include an annual contribution of
US$500,000 to support community giving and a
$25 million trust dedicated to conservation, recreation,
cultural and environmental projects and education.
We highlight these features and more in a video on the
Rosemont project that is available on the home page of
our website at hudbay.com.
For over a century, Arizona has been a favourite spot for
both amateur and professional astronomers. To avoid
impacts on the state’s astronomy industry while ensuring
employee safety, Rosemont will implement a
technologically advanced lighting system. Our lighting
plan was developed in consultation with an International
Dark-Sky Association board member, and features
include filtered LED fixtures, colour rendering to avoid
blue-spectrum lights, and shielding/beam control on
non-fixed lights to reduce direct uplight.
A unique air quality measure we will employ at the
site involves using equipment with tier 4 engines.
Tier 4 diesel engines have the highest EPA emissions
standards for off-highway vehicles, delivering a 90%
reduction in particulate matter and a 50% reduction
in nitrogen oxides emissions.
We will also use a wide range of innovative approaches
to ensure no dust leaves the site during the construction
and operation of Rosemont. Our processing equipment
will feature cartridge-style dust collectors. The conveyors
will be covered, and water-sprays situated along the
transfer points will keep dust down. Road watering and
road binders, as required, will cut down on dust
generated by mine traffic. Once the mine is operational,
we will also use natural gas–powered buses to transport
employees to and from the mine site, which will help
reduce emissions and traffic along State Route 83.
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STORY
REED MINE:
A CULTURE OF
STEWARDSHIP
FROM
CONSTRUCTION
TO CLOSURE
In 2012, Hudbay began construction on the Reed copper
mine in northwestern Manitoba, and in July 2018 the last
ore was mined and the mine’s operations came to an end.
Reed was unique in that it offered a high-grade
concentrated deposit, but it was small; it had an estimated
mine life of only five years. The plan included designing
the mine to have a very limited environmental impact due
to its location in an environmentally sensitive area.
Small, Tidy Footprint
The permitting process for Reed was rigorous
given the location of the mine and concerns about
environmental impacts. Hudbay made every effort to
not just meet the requirements in the permits, but
to exceed them when possible.
For example, while Hudbay had approval to clear trees
on 14 hectares for the site, it only needed half the area.
The site team explored ways to keep as many trees as
possible by trimming branches instead of cutting trees
down and modifying road routes if it meant fewer trees
would need to be removed. Rather than clearing a
distinct rectangle for the site, islands and peninsulas of
trees and vegetation were left untouched to accelerate
reclamation and revegetation once the site closed.
The Company minimized the number of buildings and
facilities needed by trucking ore to the concentrator at
Flin Flon.
With the five-year life of mine timeframe in mind, all
buildings were either portable (e.g., trailers) or built to
be easily dismantled. The truck shop was the only facility
built on a concrete foundation. All other buildings sat on
crushed limestone.
The site’s personnel also did their part to limit impacts by
recycling and hauling waste and used materials off the
site as soon as possible, and by keeping the site free of
any kind of litter, including used cigarettes.
Environmental Challenges Met
One of the biggest environmental issues faced by the
team at Reed was that the mine was built below a
major aquifer. If it was accidentally pierced, water from
the aquifer would have poured into the mine at a rate of
more than 1,200 gallons per minute. To mitigate the risk
and reduce the amount of water that needed to be
pumped out of the mine, a “grout curtain”, requiring
19,000 bags of cement, was built, keeping water
seepage to a manageable six to 10 gallons per minute.
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A key contributor to the successful closure of Reed was
that there was a continuity of personnel and shared
knowledge that delivered top expertise and first-rate
execution during every stage of the mine lifecycle.
Regarding expectations for the site’s future, Jay Cooper,
Director of Environment for Hudbay’s Manitoba Business
Unit, says, “Five years from now, people walking through
the site will notice that the vegetation looks a little
different – more grasses and younger trees – but they
won’t know there once was a mine there.”
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The team treated all waste rock as potentially acid
generating when brought to the surface. When
closure activities commenced, the waste rock was then
returned to the underground mine to fill voids and
improve stability.
Another concern was the mine’s impact on local animal
populations, particularly caribou. Hudbay’s longstanding
support for Manitoba’s Boreal Woodland Caribou
Recovery Strategy – a multi-year plan that supports
recovery efforts and protection of the woodland caribou
in northern Manitoba – provided crucial data for tracking
migration routes near the mine site and assessing any
impacts. A number of on-site staff members participated
in the caribou monitoring program. The site also avoided
establishing straight roads or other linear features that
give an advantage to caribou predators, used quiet
generators to mitigate noise impacts and placed venting
fans underground.
Designed for Closure
As soon as operations ceased in July of 2018, the team
moved into the closure phase. The attention to detail the
site team employed during the operating phase allowed
them to achieve numerous closure milestones by the end
of the year.
All buildings have been removed, many of them being
repurposed or sold. Soil that had been disturbed during
construction and set aside was used to contour the land
to the original topography and drainage patterns. Viable
seeds from plants on-site will be planted to help
revegetate the area.
In consultation with Manitoba Sustainable Development
officials, the team will continue environmental
reclamation and monitoring, evaluating every square
inch of the site to confirm it has been cleaned up and is
ready for revegetation.
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STORY
CONSTANCIA
LAND PACKAGE:
EXPANDING
OUR PIPELINE
Hudbay has a long, proven history of successfully
exploring and developing new mines, and our Constancia
operation in Peru demonstrates our best-in-class
approach. Constancia’s timeline from feasibility
(determining if the mineral resource can be mined
economically) to first production and the ramp-up to full,
steady-state production was the fastest among recent,
similar-sized projects. Constancia is also the lowest cost
open pit copper sulphide mine in South America.
Reaching commercial production in 2015, Constancia
was a greenfield project in a new jurisdiction for Hudbay.
One of the biggest challenges in developing the mine
was a cultural one, and Hudbay was committed to
learning about the language and values of the Peruvian
people and integrating the operation into its culture.
By acting honestly, ethically and transparently with
government officials and nearby communities, Hudbay
has built strong, positive relationships.
Expanding Operations through Exploration
Constancia is in an area that is highly prospective for
copper, and through continued exploration activities
led by Hudbay’s exploration team, we have identified
opportunities to maintain the operation’s efficiencies
and potentially extend Constancia’s mine life.
The Pampacancha deposit is a small, high-grade orebody
located only four kilometres from the Constancia mill.
Because Constancia is a porphyry copper deposit, ore
grades will likely decline as we mine deeper. However,
Pampacancha’s high grades will allow us to improve the
grade feeding the mill and maintain grades at Constancia
for around five years.
Our exploration team also believes the land around
Constancia has the potential for several deposits like
Pampacancha’s that would continue to improve the
grade of the mill feed once mining of Pampacancha is
complete. As an important step in consolidating the
land package around Constancia, in early 2018 we
acquired the mineral rights to three properties within
10 kilometres of Constancia that have a high probability
of hosting a mineral deposit.
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Reaching Agreements with
the Communities That Own the Land
Peru Exploration in Action
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While Hudbay has purchased the mineral rights to
Pampacancha and the other nearby properties, the
communities own the surface rights. Before we can do
any exploratory drilling on the sites, we have to obtain
an exploration permit and a drill permit. In Peru, we
cannot apply for a drill permit until we have completed
archaeological studies (to identify any native artifacts
and/or sites) and an environmental impact statement for
the purpose of exploration work (see infographic). And
we cannot conduct the fieldwork for the studies until we
have a community agreement in place.
We have a history of being fair and ensuring that
communities participate in the benefits from the mining
of their land. Since 2012, we have reached more than
90 agreements with the local governments and
communities near Constancia. These agreements include
commitments related to employment and business
opportunities and investments in programs (including
health, education, infrastructure and socio-economic
initiatives) that the community has identified as a priority.
We have a land access agreement with one of the four
communities holding land rights over two of the six areas.
Negotiations with the other communities continue.
1.
Find a
prospective area:
2.
Before Hudbay performs
any drilling or geological
sampling, a number of
factors – location, history,
surface-level visual
evidence, aeromagnetic
surveys – help determine
if an area is prospective.
Secure subsurface
mineral rights:
The Peruvian state retains
the ownership of all
mineral resources, and
obtaining the right to
undertake mining
activities is negotiated
with the federal
government.
3.
Negotiate surface-rights
agreements with local
communities:
Hudbay works directly
with local councils as well
as representatives from
the regional and federal
governments.
4.
Identify native
artifacts and sites:
After community
agreements are reached,
we conduct archaeological
studies to look for
indications of historic
peoples and/or artifacts.
These reports are submitted
to the government and are
used to establish protocols
for treating any historically
significant findings during
the drilling process.
5.
Assess
environmental impacts:
While archaeological
studies are proceeding,
we prepare and submit an
environmental impact
assessment (EIA) showing
how we will manage/
mitigate the impacts of
exploratory drilling.
6.
Apply for
permit to drill:
After the EIA is accepted,
Hudbay can apply for an
exploratory drilling
permit. Good for three
years, the permit dictates
where and how we
can drill during the
exploration phase.
7.
Commence
exploratory drilling:
Once the drilling permit is in
hand, our exploration office
in Lima will set up several
teams to go into the field
and start drilling. The teams
are made up of geologists
and geophysicists as well as
people from the local area
who provide support.
8.
Drill core samples:
On each drilling platform
(a few metres square in
size), teams drill several
holes about 500 metres
deep to bring up core
samples – cylindrical
sections of subsurface
material that provide a
visual record of the rocks
and ores sampled.
9.
Analyze samples:
The core samples are
analyzed by independent
experts to determine
the percentage of
economically worthwhile
minerals (i.e., copper,
zinc, silver, gold, etc.) in
a given sample.
10.
Determine
economic viability:
If samples from a given
area consistently contain a
suitable grade of valuable
minerals, then Hudbay
considers a whole range of
factors – location, labour
availability, environmental
issues, current and
expected mineral prices,
etc. – to determine
whether a mine is likely to
be economically viable.
11.
Begin
development process:
Once the drilling process
confirms the presence of a
viable resource, the process
begins for conducting a
comprehensive EIA and for
obtaining the other permits
required for building and
operating a mine.
Hudbay 2018 Annual and CSR Report
| Our Company
11
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OUR COMPANY
Hudbay is an integrated mining company producing copper concentrate (containing copper, gold and silver),
molybdenum concentrate and zinc metal. Hudbay owns three polymetallic mines, four ore concentrators and a zinc
production facility in northern Manitoba and Saskatchewan (Canada) and Chumbivilcas (Peru), and a copper project in
Arizona (United States). The Company is governed by the Canada Business Corporations Act, and its shares are listed
under the symbol “HBM” on the Toronto Stock Exchange, New York Stock Exchange and Bolsa de Valores de Lima.
GRI 102-1 | 102-2 | 102-3 | 102-4 | 102-5
Hudbay 2018 Annual and CSR Report
| Our Company
12
MANITOBA, CANADA
CEO Message
Lalor
777
Reed
Our Feature Stories
• 100% ownership
• 100% ownership
• 70% ownership
Our Company
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• Long-life, underground
zinc/gold/silver/copper
mine
• Stall and Flin Flon
concentrators process
Lalor base metal ore
• New Britannia
concentrator to be
refurbished to process
Lalor gold-rich ore
ARIZONA, USA
Rosemont
• 100% ownership*
• Open pit copper project
• Underground copper/
zinc/gold/silver mine
• Flin Flon concentrator
• Hydrometallurgical zinc
plant
• Underground copper
mine (ceased
operations on July 25,
2018)
CHUMBIVILCAS, PERU
Constancia
• 100% ownership
• Open pit copper/
molybdenum mine and
concentrator
EXPLORATION PROPERTIES
• Peru
• Chile
• Nevada, USA
• Manitoba, Canada
• British Columbia, Canada
GRI 102-4
BRITISH
COLUMBIA
Exploration
MANITOBA
777
Lalor
Reed
ARIZONA
Rosemont
Operations
Development
Exploration
NEVADA
Ann Mason
PERU
Constancia
CHILE
Exploration
* Our ownership in Rosemont is subject to an earn-in agreement with
United Copper and Moly LLC (UCM) pursuant to which UCM has earned
a 7.95% interest in the project and may earn up to a 20% interest. We
announced an agreement to purchase UCM’s Rosemont interest in our
March 13, 2019 news release.
Hudbay 2018 Annual and CSR Report
| Our Company
13
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VISION, MISSION, VALUES
VISION
We will be a responsible top-tier operator of long-life,
low-cost mines in the Americas.
MISSION
Our mission is to create sustainable value through
acquisition, development and operation of high-quality,
long-life deposits with exploration potential in
jurisdictions that support responsible mining, and to see
the regions and communities in which we operate benefit
from our presence.
VALUES
Dignity & Respect
We treat each other in ways that bring out the very best
in each of us.
Caring
We sustain and contribute to the well-being of people
and the environment in which we operate.
Openness
We speak freely and listen with care about opportunities,
issues and concerns.
Trustworthiness
We can count on each other to do the right thing, and we
follow through on our commitments.
GRI 102-16
Hudbay 2018 Annual and CSR Report
| Our Company
14
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CORPORATE GOVERNANCE
Strong corporate governance – built on openness,
accountability and trust – is an expectation of
shareholders and stakeholders and is crucial for
operating and growing the business.
Hudbay’s Board of Directors is committed to strong
corporate governance practices and the highest
standards of ethical conduct.
In late 2018, a shareholder, Waterton Global Resource
Management, initiated a proxy contest seeking change
to Hudbay’s Board. As is typical of these contests, there
was vigorous debate on both sides, as was reflected in
our 2019 Management Information Circular. Following
the achievement of a number of business milestones and
based on the input of many of our shareholders, we
reached a settlement agreement with the shareholder
that provided for a continuation of our ongoing board
refreshment process.
Our Board has been consistently recognized for strong
corporate governance practices. At our 2018 annual
shareholders’ meeting, proxy advisor Institutional
Shareholder Services (ISS) recommended that
shareholders vote to re-elect all Hudbay board members,
as it has done over the last nine years, and it ranked
Hudbay in its top 20% for overall governance quality. We
were also among the top 50 – and the only base metal
miner in the top 100 – in The Globe and Mail’s 2018 Board
Games Corporate Governance Ranking.
Members of our Board are highly qualified individuals
who were selected based on qualifications that include
judgment, character, expertise, skills and knowledge
useful to the oversight of the Company’s business;
diversity of viewpoints, backgrounds, experiences and
other demographics including gender; and business or
other relevant experience. Among our board members:
• 100% have a strong track record of leadership
• 100% have served as a CEO or senior officer
• 100% have international business experience – an
important qualification for our business
• 80% have finance and merger and acquisition
(M&A) experience
• 80% have experience in the mining or natural
resource industries
The Board fulfills its responsibilities directly and
through five committees: Audit; Compensation and
Human Resources; Corporate Governance and
Nominating; Environmental, Health, Safety and
Sustainability; and Technical.
See our Management Information Circular to
learn more.
GRI 102-20 | 102-22 | 102-23 | 103-2
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| Our Company
BOARD OF DIRECTORS
15
ALAN R. HIBBEN*
SARAH B. KAVANAGH*
IGOR GONZALES*
CHAIR
CORPORATE GOVERNANCE AND
NOMINATING COMMITTEE (CHAIR)
ENVIRONMENTAL, HEALTH, SAFETY AND
SUSTAINABILITY COMMITTE (CHAIR)
CORPORATE GOVERNANCE
AND NOMINATING COMMITTEE
ENVIRONMENTAL, HEALTH, SAFETY
AND SUSTAINABILITY COMMITTEE
TECHNICAL COMMITTEE
CARIN S. KNICKEL*
ALAN HAIR
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
RICHARD HOWES*
COMPENSATION AND HUMAN
RESOURCES COMMITTEE
TECHNICAL COMMITTEE
CAROL T. BANDUCCI*
AUDIT COMMITTEE (CHAIR)
ENVIRONMENTAL, HEALTH, SAFETY
AND SUSTAINABILITY COMMITTEE
DAVID SMITH*
CORPORATE GOVERNANCE
AND NOMINATING COMMITTEE
COMPENSATION AND HUMAN
RESOURCES COMMITTEE
* Independent
PETER KUKIELSKI*
More information on our Board of Directors
ENVIRONMENTAL, HEALTH, SAFETY
AND SUSTAINABILITY COMMITTEE
TECHNICAL COMMITTEE
Learn more:
• Governance policies, standards, guidelines and
committee charters
• Management Information Circular
COMPENSATION AND HUMAN
RESOURCES COMMITTEE (CHAIR)
CORPORATE GOVERNANCE AND
NOMINATING COMMITTEE
COLIN OSBORNE*
TECHNICAL COMMITTEE (CHAIR)
AUDIT COMMITTEE
DANIEL MUÑIZ
QUINTANILLA*
AUDIT COMMITTEE
GRI 102-18 | 102-22 | 102-23
Hudbay 2018 Annual and CSR Report
| Our Company
BUSINESS CONDUCT
How we do our work is as important as what we do.
Companies that establish high-trust environments
consistently deliver greater value.
assets, systems and property; and fostering a work
environment of respect and dignity.
In 2018, we created alignment around the principles that
reflect how we will work together. The outcome was a
validation of our values of dignity and respect, caring,
openness and trustworthiness. Throughout the year,
these values were cascaded throughout the organization
via in-person meetings with our CEO, workshops at each
business unit, a video featuring our CEO and other
internal communications.
Our values are also expressed in our Code of Business
Conduct and Ethics (Code of Business Conduct), which
states the principles of ethical conduct expected of
everyone working on behalf of Hudbay and its
subsidiaries and affiliates. These principles include
avoiding conflicts of interest; complying in good faith
with all applicable laws, rules and regulations; protecting
Hudbay’s confidential and proprietary information,
Personnel who report concerns about unethical or illegal
behaviour are protected by our Whistleblower Policy,
which expressly prohibits discrimination, harassment
and retaliation against anyone reporting conduct they
believe is in violation of our Code of Business Conduct or
any laws.
Hudbay personnel may participate in the political
process as private citizens; however, our Code of
Business Conduct prohibits political contributions made
on Hudbay’s behalf.
The standards of conduct that we expect of suppliers
who wish to do business with Hudbay are stated in our
Supplier Code of Conduct and Ethics (Supplier Code of
Conduct). All suppliers must read, accept and comply
with the Supplier Code of Conduct and all applicable
compliance policies – including our Statement on
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16
Anti-Corruption, our Human Rights Policy and our
Environmental Health and Safety Policy – as a condition
to doing business with Hudbay. Suppliers are expected
to promptly investigate any allegation that their
personnel violated our Supplier Code of Conduct.
COMPLIANCE TRAINING
Our legal department provides compliance training on
our Code of Business Conduct and related policies to all
employees with a Hudbay email address as well as to the
Board. This includes training on the Canadian Corruption
of Foreign Public Officials Act (CFPOA) and the US Foreign
Corrupt Practices Act (FCPA) to specific groups or across
the organization as the Company deems appropriate.
Board members and employees must confirm that they
understand and will comply with the Code of Business
Conduct upon joining the Company. Every director and
executive officer must disclose any direct or indirect
conflict of interest to the Board, and all directors,
officers, and employees with a Hudbay email address are
required to annually confirm compliance with the Code
of Business Conduct, the Confidentiality and Insider
Trading Policy and our Statement on Anti-Corruption.
In 2018, we required all employees with a Hudbay email
address to complete an online anti-harassment and
discrimination course. Of the individuals required to
participate in the training, 100% (representing 50% of
our workforce) completed the course. For individuals
who initially failed to comply, the Company suspended
their email access until they completed the training.
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17
Primary risk ownership is assigned to the business unit or
function where the risk originates. On a quarterly basis,
risk information is consolidated and reported to our
executive management team and the Board. The Vice
President, Risk Management, and the Director, Risk
Management, lead the ERM program, and the Board’s
Audit Committee provides oversight of the risk
management function.
We discuss long-term and emerging risks and their
potential business impacts in the Risk Factors section of
our Annual Information Form.
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RISKS, ISSUES OR COMPLAINTS
An assessment of corruption risks at our three business
units and our corporate office identified that potential
for the violation of the CFPOA and the FCPA constitutes
a significant risk in Peru due to difficulties in monitoring
the compliance of contractors and agents (and
potentially employees as the Company grows), as well as
the increased enforcement of anti-corruption legislation.
There were no incidents of corruption reported in 2018,
and no accusations of corruption involving employees,
business partners or legal cases were brought against
the Company. Through our third-party whistleblower
reporting service, 16 incidents were reported in 2018, all
of which were investigated and resolved with corrective
action where necessary. While none of these incidents
involved significant allegations of fraud or violations of
our Code of Business Conduct, some allegations were
brought forward related to business, health, safety and
environmental practices, inappropriate behaviour, and
violations of company policies or procedures.
Stakeholders may report an issue in one or more of the
following ways:
• Contact our Board of Directors by mail or by email at
chair@hudbay.com.
• Submit a confidential report to the Chair of Hudbay’s
Audit Committee about auditing matters or perceived
violations of the Company’s internal and accounting
controls, Code of Business Conduct or Supplier Code
of Conduct by calling +1 877 457-7318 or by visiting
clearviewconnects.com. Reports are handled under
our Whistleblower Policy, and the Chair of the Audit
Committee is responsible for ensuring that they are
appropriately investigated.
• Canada’s National Contact Point (NCP) for the
Organisation for Economic Co-operation and
Development (OECD) provides a forum where
GRI 102-30 | 103-2 | 205-1 | 205-2 | 205-3
multinational enterprises, Canadian businesses,
non-governmental organizations and labour
organizations can voice their views and concerns.
Canada’s NCP can be reached by email at
ncp.pcn@international.gc.ca or by telephone
at +1 343 203-2341.
• In January 2018, the independent Canadian
Ombudsperson for Responsible Enterprise (CORE)
replaced the office of the CSR Councillor in addressing
human rights complaints related to Canadian
companies operating overseas. More information
about the development of the CORE’s roles and
responsibilities is available on the Government of
Canada’s website.
• Community concerns are addressed through our
grievance process at each project and operating site.
For details, see Community Relations.
RISK MANAGEMENT
As a mining company operating and exploring in multiple
jurisdictions, Hudbay’s risk profile is broad, so an
effective approach to risk management is essential to
achieving our business objectives.
Our enterprise risk management (ERM) program helps
us identify existing and emerging risks to our business,
promotes alignment across the organization, and
embeds effective risk management practices and tools
into our culture, systems and processes.
All Hudbay executives are responsible for integrating
risk management into their strategic business
planning, budget and resource allocation, operating
performance, and human resource, financial and
compliance processes. This framework requires practices
for risk identification, assessment, measurement,
monitoring, reporting and treatment.
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| Our Company
MANAGEMENT TEAM
18
Our management team provides strategic leadership, sets the tone for a culture of integrity and compliance,
and establishes, implements and oversees the Company’s long-range goals, strategies, plans and policies,
subject to the Board’s direction and oversight.
Learn more
• Management team biographies
ALAN HAIR
PRESIDENT AND
CHIEF EXECUTIVE
OFFICER
EUGENE LEI
SENIOR VICE PRESIDENT,
CORPORATE DEVELOPMENT
AND STRATEGY
JON DOUGLAS
VICE PRESIDENT
AND TREASURER
ROBERT ASSABGUI
VICE PRESIDENT,
MANITOBA BUSINESS UNIT
DAVID BRYSON
SENIOR VICE PRESIDENT
AND CHIEF FINANCIAL
OFFICER
DAVID CLARRY
VICE PRESIDENT,
CORPORATE SOCIAL
RESPONSIBILITY
ELIZABETH GITAJN
VICE PRESIDENT,
RISK MANAGEMENT
JAVIER DEL RIO
VICE PRESIDENT,
SOUTH AMERICA
BUSINESS UNIT
CASHEL MEAGHER
SENIOR VICE PRESIDENT
AND CHIEF OPERATING
OFFICER
PATRICK DONNELLY
VICE PRESIDENT AND
GENERAL COUNSEL
ANDRÉ LAUZON
VICE PRESIDENT,
ARIZONA BUSINESS UNIT
OLIVIER TAVCHANDJIAN
VICE PRESIDENT,
EXPLORATION AND GEOLOGY
ADRIENNE BLAZO
PETER AMELUNXEN
VICE PRESIDENT,
ORGANIZATIONAL
EFFECTIVENESS
VICE PRESIDENT,
TECHNICAL SERVICES
PETER ADAMEK
(EFFECTIVE MAY 1, 2019)
VICE PRESIDENT, FINANCE
Hudbay 2018 Annual and CSR Report
| Business and Financial Review
19
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BUSINESS AND
FINANCIAL REVIEW
In 2018, Hudbay acquired the Ann Mason project and
consolidated the mineral rights around our Constancia
property. Over the long term, we expect these
acquisitions will make a positive contribution to our
development pipeline and be accretive to long-term
value. More significantly, in 2018 we were able to
leverage our skills as mine operators to enhance the value
and potential of our existing assets. At Constancia, we
were able to use metallurgical techniques and implement
process improvements that resulted in record
performances for copper recoveries, mill throughput and
molybdenum production. At Lalor, actions taken over the
year have put the mine on track for delivering
4,500 tonnes per day in early 2019, and we were able to
update our reserve and resource estimates to include a
65% increase in contained gold (Technical Report). To
further increase the value and extend the mine life of
existing operations, while expanding our potential
development pipeline, we have committed $40 million to
exploration activities in 2019.
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| Business and Financial Review
20
KEY ACCOMPLISHMENTS
2018 SUMMARY
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• On a consolidated basis, Hudbay’s copper production
exceeded the midpoint of 2018 guidance by 14% and
production of zinc and precious metals was within
2018 guidance ranges; copper production at
Constancia exceeded the top end of 2018 guidance
and Manitoba copper production was at the top end
of the guidance range
• At Constancia, achieved record mill throughput,
record copper recoveries and record molybdenum
production in 2018
• Generated cash from operating activities of
$479.6 million in 2018
• Decreased net debt to $465.5 million as at
December 31, 2018, including cash and cash
equivalents of $515.5 million
• Updated reserve and resource estimates at Lalor,
including a 65% increase in gold reserves
CSR Performance
• New Lalor mine plan more than doubled expected
annual gold production to approximately
140,000 ounces over the first five years following
the refurbishment of New Britannia at a sustaining
cash cost, net of byproduct credits of $450 per ounce,
positioning Lalor as one of the lowest cost gold mines
in Canada (Technical Report)
Operations Summary
For the years ended December 31
Production (contained metal in concentrate)1
Copper (000 tonnes)
Zinc (000 tonnes)
Gold (000 ounces)
Silver (000 ounces)
1 Metal reported in concentrate is prior to refining losses or deductions associated with smelter contract terms.
2018
154.5
115.6
119.9
2017
159.2
135.2
108.6
3,954.4
3,487.3
Financial Summary
Financial Condition
(in $000s)
Cash and cash equivalents
Working capital
Total assets
Total long-term debt
Equity
Dec. 31, 2018
Dec. 31, 2017
(Restated)
$ 515,497
$ 356,499
445,228
251,388
4,685,635
4,728,016
981,030
979,575
2,178,856
2,112,345
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| Business and Financial Review
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Financial Performance
(in $000s, except per share and cash cost amounts)
Revenue
Profit before tax
Basic and diluted earnings (loss) per share1
Profit (loss)
Operating cash flows before change in non-cash working capital
Production
Contained metal in concentrate2
Copper (tonnes)
Gold (ounces)
Silver (ounces)
Zinc (tonnes)
Metal sold
Payable in metal in concentrate2
Copper (tonnes)
Gold (ounces)
Silver (ounces)
Refined zinc (tonnes)
1 Attributable to owners of the Company.
2 Metal reported in concentrate is prior to deductions associated with smelter contract terms.
Dec. 31, 2018
Dec. 31, 2017
(Restated)
$ 1,472,366
$ 1,402,339
170,837
172,911
0.33
0.57
85,416
139,692
493,471
530,561
154,550
159,192
119,882
108,593
3,954,469
3,487,258
115,588
135,156
147,923
148,655
113,097
109,770
3,372,353
3,060,269
115,723
116,377
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GRI 102-7
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| Business and Financial Review
22
STRATEGY
• Our focus is on adding long-life, low-cost assets to our
portfolio. Long-life assets can capture peak pricing in
multiple commodity price cycles, while being low cost
enables these assets to generate free cash flow even
during price downturns.
• Real value is created by leading efficient project
development and operations; we also feel that large,
transformational mergers are risky and potentially
value destructive.
• Acquisitions should be accretive to Hudbay on a per
share basis.
FINANCIAL AND BUSINESS
OBJECTIVES FOR 2019
Looking ahead, in 2019 we intend to advance our new
Lalor gold strategy, actively move forward on project
development for Rosemont, develop the high-grade
Pampacancha satellite deposit, establish exploration
access agreements with communities in the newly
consolidated mineral rights around Constancia, and
pursue near-mine and greenfield exploration activities.
We aim to:
• Maintain our industry-leading low-cost business to
continue to generate positive cash flow
• Complete a new reserve and resource estimate for
the Snow Lake operations, including our 100% owned
Lalor, Pen, Wim and New Britannia properties, and
advance plans for the refurbishment of the New
Britannia mill
• Maintain targeted recoveries and throughput at
Constancia, while identifying areas of upside through
continuous improvement initiatives
• Begin development of the Pampacancha
satellite deposit
Hudbay works to create sustainable value by acquiring,
developing and operating high-quality, long-life deposits
with exploration potential in jurisdictions that support
responsible mining. We also take care to ensure that the
regions and communities in which we operate benefit
from our presence.
Our goal is to grow Hudbay by exploring and developing
properties we already control, such as our Rosemont
project in Arizona, and by acquiring other properties that
fit our strategic criteria. Moreover, we work continuously
to optimize the value of our producing assets through
efficient and safe operations.
We believe that the best way to create shareholder value
in the mining industry is by discovering new mineral
deposits and developing new facilities to profitably
extract ore from those deposits. We believe that our
successful development, ramp-up and operation of the
Constancia mine in Peru, added to our long experience
of mining in northern Manitoba, give us a competitive
advantage in these respects, when compared to other
mining companies of a similar size.
To make sure our acquisitions create sustainable value
for stakeholders, we have clear criteria for evaluation of
mineral property opportunities. These include:
• Potential acquisitions should be in jurisdictions that
support responsible mining and have acceptable levels
of political risk.
• We should be able to take advantage of our expertise
in exploring and developing porphyry and
volcanogenic massive sulphide mineral deposits.
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| Business and Financial Review
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• Advance Rosemont through the final stage of
permitting and initiate early works activities
• Test promising exploration targets near Lalor and plan
near-term exploration programs in Peru, Chile, British
Columbia and Nevada
• Continue to evaluate exploration and acquisition
opportunities that meet our criteria described
above and pursue those opportunities that we
determine to be in the best interest of the Company
and our stakeholders
BUSINESS ACTIVITIES
In 2018, we continued to drive efficiencies at our
operations; this enabled us to exceed the midpoint of
our copper production guidance while delivering zinc
and precious metals production within our guidance
ranges. Despite a downward trend in prices over the
year, we were still able to generate positive free cash
flow. At our Constancia operation, we enjoyed record
performance in mill throughput, copper recovery and
molybdenum production. We were also able to
consolidate the land package around Constancia. We
are very pleased to report that work done at Lalor
throughout 2018 will help us fully understand the Lalor
gold zone and find the optimal gold processing solution
for maximizing its long-term value.
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2018 PERFORMANCE HIGHLIGHTS
• Across the Company, produced 154,550 tonnes of
copper in concentrate, 115,588 tonnes of zinc in
concentrate and 176,375 ounces of precious metal
in concentrate
• Focused on cost efficiency, with a consolidated cash
cost of $0.94 per pound copper and an all-in sustaining
cash cost of $1.52 per pound
• Generated significant free cash flow and reduced net
debt to $466 million
• Completed the closure and reclamation of the
Reed mine
• Determined that the optimal way to maximize value
from Lalor’s gold-rich ore is to refurbish the New
Britannia gold mill
• Announced increased reserves and resources at our
• Increased mill throughput by 9% compared to 2017, as
a result of mine blasting optimization and increased
plant availability
• Continued community negotiations at Pampacancha;
once operational, the high-grade Pampacancha
deposit will enhance the grade of Constancia feed
Lalor mine and nearby satellite deposits
• Consolidated the highly prospective mineral rights
• Released an updated mine plan for Lalor incorporating
the refurbishment of the New Britannia mill for
processing gold and copper-gold ore
around our Constancia property
Corporate Exploration
• Completed our acquisition of Mason Resource Corp.
Peru Business Unit
and its wholly owned Ann Mason project
• Expanded our portfolio of owned or optioned mineral
properties to comprise more than 885,000 hectares
Manitoba Business Unit
• Set a closure date in 2022 for the 777 mine and mill
and Flin Flon zinc plant
• Based on 2018 operating costs1, Constancia
recognized as the lowest cost open pit copper mine in
South America
• Conducted infill drilling at Lalor that supported a
substantial increase in Lalor’s mineral reserve
• Acquired the Ann Mason copper deposit in Nevada
• Achieved record mill throughput, copper recoveries
and molybdenum production
1 Source: Wood Mackenzie (Q4 2018 dataset; primary copper, open pit sulphide mines in South America). Wood Mackenzie’s costing methodology may be different than the methodology reported by Hudbay or its peers in their
public disclosure. For details regarding Hudbay’s costs, refer to Hudbay’s Management’s Discussion and Analysis for the three and 12 months ended December 31, 2018.
FINANCIALS
In 2018, as in recent years, Hudbay again met or exceeded our production guidance
ranges for metal production for the year on a consolidated basis, while continuing to
generate free cash flow. Combined unit costs at Manitoba were within our revised
guidance ranges for the year. In Peru, combined unit costs aligned with 2018 guidance
ranges after taking into account the cost of higher than anticipated molybdenum
production, and total capital expenditures were within expectations. Hudbay’s full year
revenue was $1,472.4 million, $70.1 million higher than 2017. This increase was driven
by significantly higher realized sales prices for all commodities and higher sales volumes
for precious metals. Through maintaining consistent cost discipline, we delivered an
all-in sustaining cash cost for copper produced, net of byproduct credits, of $1.52
per pound.2
Consolidated Financial Statements
Management’s Discussion and Analysis
2 Operating cash flow per share and cash cost per pound of copper produced, net of byproduct credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed
reconciliation, please see the discussion under “Non-IFRS Financial Performance Measures” beginning on page 45 of Hudbay’s Management’s Discussion and Analysis filed February 19, 2019.
GRI 102-2 | 102-7
Hudbay 2018 Annual and CSR Report
| CSR Approach
25
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CSR APPROACH
Hudbay’s corporate social responsibility (CSR) efforts are led by a team of dedicated, experienced professionals,
and guided by our values and by policies, systems and practices that uphold our commitment to responsible,
sustainable development.
305
EMPLOYEES
Hudbay employees
participated in human
rights training in 2018
GRI 102-29 | 103-1 | 103-2
Received honourable mention
award for sustainability
reporting from Finance
Montreal’s Finance and
Sustainability Initiative (FSI)
AAA
RATING
Constancia received AAA
rating in annual TSM self-
assessment of Aboriginal and
community outreach, safety
and health, and biodiversity
conservation management
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STORY
ENGAGING TRADITIONAL
KNOWLEDGE HOLDERS
ON MILL REFURBISHMENT
PROJECT
At our Lalor mine, we evaluated options for processing
the gold and copper-gold zones, and this evaluation
included refurbishing the New Britannia mill, which has
been on care and maintenance for around 14 years.
The mill refurbishment plan includes using as much
existing infrastructure as possible. However, we will need
to construct some new facilities to store and process ore,
and we will need to make some minor adjustments to
the tailings pipeline path between the mill, the
concentrator and the tailings impoundment area.
In assessing the impacts of the project on the
environment and the community, we seek to attain the
traditional knowledge of the indigenous people near
the mine. Because of their in-depth knowledge of the
land and their ability to distinguish project impacts
from natural changes in the environment, during
two terrestrial field programs in the spring and fall,
traditional knowledge holders joined biologists to walk
the entire length of the proposed pipeline corridor and
identify medicinal plants, local wildlife and heritage
resources. Along with obtaining valuable insight, the
engagement helped strengthen the relationship
between Hudbay and the community.
Hudbay’s environmental, health and safety (EHS)
management systems have been in place for many years,
and have been compliant with international standards for
15 years. These systems provide the structure for
conducting business in a way that manages our impact on
the environment and minimizes and controls our health
and safety risks. Our EHS systems are designed to support
compliance with standards and reporting frameworks
(both internal and external), drive continuous
improvement and align with our business strategy.
During the year, we conducted a review of our EHS
management systems, gathering feedback from
operations managers on what is working well, what is not
and how we can improve. We also tested how well the
managers understood the systems and how they worked.
Key findings from the review included:
• Managers felt that there is a need for more training on
the systems across all levels of their business unit, and
that the training needs to highlight why the systems
are in place and how they are applied.
• The systems and associated audits and certifications
added value and were deemed important, but the
documentation was onerous and opportunities existed
to reduce complexities.
• Some system elements need to be better tailored to
the specific operation.
• The concept of routine – such as the safety calendars
in Manitoba that detail tasks, frequency and
accountability for safety-related activities – was
viewed as an effective tool for making sure teams
are focused on the right tasks.
Each site is working to address these findings. Providing
support to the sites’ efforts is the EHS Management
Review Committee (comprising the CEO, COO,
operations VPs and corporate CSR group) and the
principles of our OneHudbay initiative.
GRI 102-21 | 103-2
STORY
IMPROVING THE SYSTEMS
THAT HELP OPTIMIZE
PERFORMANCE
Hudbay 2018 Annual and CSR Report
| CSR Approach
27
CSR GOVERNANCE
To build stakeholders’ trust and ensure we operate in
a responsible and sustainable manner, our Board of
Directors and senior leaders have a dedicated focus on
corporate responsibility issues and ensure social and
environmental risk mitigation programs are being
integrated throughout the business.
The Board of Directors’ Environmental, Health, Safety
and Sustainability (EHSS) Committee provides oversight
of the Company’s human rights, environmental, health
and safety policies, programs and systems. The
Committee meets quarterly to review the Company’s
performance and management of key EHSS risks. It
also tracks the effectiveness of Hudbay’s management
systems through the external ISO 14001 and
OHSAS 18001 certification and TSM performance
assessment processes. Each of our operations employs
personnel dedicated to the day-to-day management of
health, safety, environmental, community relations and
other social matters. Our Vice President, Corporate
Social Responsibility, oversees these efforts.
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CSR MANAGEMENT FRAMEWORK
BOARD OF DIRECTORS
EHSS
COMMITTEE
AUDIT
COMMITTEE
CEO
COO
CFO
VPs
OPERATIONS
& PROJECTS
VP CSR
VP RISK
MANAGEMENT
Allocation of resources
and oversight to ensure
responsible operations
Systems, support,
and internal assurance
for environment,
health & safety and
social performance
Systems, support,
and internal assurance
for financial and
regulatory compliance
VP & GENERAL
COUNSEL
Systems, support, and
internal assurance for
Code of Business Conduct
Hudbay’s Code of Business Conduct, Human Rights
Policy, Environmental Health and Safety Policy
and Supplier Code of Conduct state our social,
environmental and ethical commitments across our
business, including our supply chain.
Corporate and site-specific management systems
support decision-making and performance. Operating
sites are required to maintain certification under the
internationally accepted ISO 14001 (environmental) and
OHSAS 18001 (health and safety) standards. New sites
are expected to achieve certification within two years of
the start of commercial operations or acquisition by
Hudbay. Both our Manitoba and Peru business units
maintained ISO 14001 (including the latest version,
ISO 14001:2015) and OHSAS 18001 throughout the year.
GRI 102-16 | 102-18 | 102-19 | 102-20 | 102-25 | 102-26 | 102-29 |102-31 | 102-32 | 102-56
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We use a company-wide integrated management
system to set objectives; identify risks; track health,
safety and environmental incidents; capture stakeholder
engagement activities and commitments; and document
corrective actions at all sites. During the year, we
conducted a review of our existing environmental,
health and safety management systems to
understand issues and discuss opportunities for
improvement.
As a member of the Mining Association of Canada (MAC),
Hudbay participates in the Towards Sustainable Mining
(TSM) program. TSM aims to drive performance and to
help mining companies evaluate and manage their
environmental and social responsibilities. The program
supports Hudbay’s accountability, transparency and
credibility by evaluating and publicly reporting our
performance across the following eight protocols:
• Aboriginal and Community Outreach
• Safety and Health
• Crisis Management and Communications Planning
• Preventing Child and Forced Labour
• Biodiversity Conservation Management
• Tailings Management
• Energy Use and Greenhouse Gas (GHG) Emissions
Management
• Water Stewardship (new reporting starting in 2021)
In 2017, the TSM program added the Preventing Child
and Forced Labour protocol and enhanced the Tailings
Management protocol. In 2018, the Water Stewardship
Policy Framework was incorporated into a new Water
Stewardship protocol. Verification of our compliance
with the Preventing Child and Forced Labour protocol
will be reported in our 2018 assessments (published in
early 2019). We will report against the updated Tailings
Management protocol beginning with our 2019
GRI 102-11 | 102-12 | 102-29
assessment and against the Water Stewardship protocol
in 2021. TSM also includes a mine closure framework for
working with communities to develop mine closure plans
that address the socio-economic impact of closure.
These protocols and frameworks are incorporated into
our overall management system and company standards.
Although we are only required to implement the
program at our Canadian operations, we commit to
implementing the program at all of our operations.
Results of our annual TSM assessment are available on
the MAC website. In 2019, MAC will transition from its
annual TSM Progress Report – currently published as a
single document in the spring – to a new public TSM
reporting website, which will present TSM scores and
company profiles in a digital format. The new site
(scheduled for launch in mid-2019) will publish scores as
they are submitted, allowing members to update their
results throughout the year.
INTERNATIONAL BEST
PRACTICE STANDARDS
To inform our sustainability programs and improve our
performance, we apply the following international best
practice standards:
• ISO 14001 environmental management standard
• OHSAS 18001 health and safety management standard
• ISO 9001 quality management standard for the
production and supply of cast zinc products
• Towards Sustainable Mining – the Mining Association
of Canada’s (MAC) set of tools and indicators to drive
performance and ensure key mining risks are managed
responsibly. While TSM is only a requirement for MAC
members at their sites in Canada, Hudbay applies
these standards internationally to all of its operations
• Voluntary Principles on Security and Human
Rights – an operating framework that ensures security
practices include respect for human rights
• Global Reporting Initiative (GRI) – the generally
accepted framework for reporting on an organization’s
economic, environmental and social performance
• CDP (formerly called the Carbon Disclosure Project) –
thousands of organizations globally measure and
disclose their greenhouse gas emissions, water use
and climate change strategies through CDP and
CDP Water
• Extractive Industries Transparency Initiative
(EITI) – Hudbay is an official supporting company of
the EITI. In Peru, we are a member of the Peruvian
Mining Society, which is committed to the EITI process
in Peru
• IFC Performance Standards – the International
Finance Corporation (IFC), part of the World Bank
Group, is the largest global development institution
focused exclusively on the private sector in developing
countries. Hudbay follows the IFC’s Performance
Standards on Environmental and Social Sustainability
at our Constancia site in Peru
PRECAUTIONARY APPROACH
From early exploration through closure, Hudbay
operates under the precautionary principle: the duty to
prevent harm, when it is within our power to do so and
when harm is scientifically plausible but uncertain. We
use baseline environmental and social impact studies to
evaluate how to avoid, mitigate or control potentially
significant impacts; implement appropriate monitoring
and management systems; and address the need for
mine closure. In all cases, we make provisions for public
consultation and input.
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INDUSTRY INVOLVEMENT
In 2018, Hudbay participated in industry associations and
multi-stakeholder groups through membership, funding,
sharing of expertise, and participation in committees and
working groups. Memberships include the following:
• Aboriginal Chamber of Commerce (Manitoba)
• AIME – Society of Mining Engineers
• Devonshire Initiative (a Canadian forum for leading
international development, NGOs and mining
companies to engage on mining and community
development issues)
• EITI – Extractive Industries Transparency Initiative
• Empresarios por la Educación (a Peruvian private
sector organization to promote and develop
educational projects)
• Alliance of Construction Trades (Arizona)
• Flin Flon Chamber of Commerce
• American Exploration and Mining Association
• Arizona Mining Association
• Arizona Small Business Association
• Arizona Tax Research Association
• Arizona Trail Association
• Asociación Vida Perú (a non-profit organization that
donates medical equipment and medicines)
• Business for Social Responsibility (BSR)
(a non-profit business network and consultancy
dedicated to sustainability)
• Cámara de Comercio Canadá Perú
• Canadian Council for Aboriginal Business
• Canadian Institute of Mining, Metallurgy and
Petroleum and relevant societies
• Several Arizona Chambers of Commerce – Benson San
Pedro Valley, Greater Oro Valley, Greater Vail Area,
Green Valley/Sahuarita, Marana, Nogales–Santa Cruz,
Sierra Vista Area, Tucson Hispanic, Tucson Metro
• Confederación Nacional de Instituciones Empresariales
Privadas, CONFIEP (National Confederation of Private
Business Institutions in Peru)
• Cusco Chamber of Commerce
• Grupo de Diálogo, Minería y Desarrollo Sostenible
(multi-stakeholder group promoting open and
transparent dialogue on mining, environmental
protection and sustainable development in Peru)
• Iniciativa para la Transparencia de las Industrias
Extractivas en Perú, EITI–Perú (Extractive Industries
Transparency Initiative)
• International Zinc Association
• Manitoba Employers Council
• Metropolitan Pima Alliance
• Mining Association of Canada
• Mining Association of Manitoba Inc.
• Mining Foundation of the Southwest (US)
• Mining Safety Round Table (a collaborative group of
safety-committed mining companies that share
experiences and identify best practices)
• National Mining Association (US)
• Saskatchewan Mining Association
• Snow Lake Chamber of Commerce
• Southeast Arizona Economic Development Group
• Southeastern Arizona Contractors Association
• Southern Arizona Business Coalition
• Southern Arizona Leadership Council
GRI 102-12 | 102-13 | 102-16 | 102-29 | 102-33 | 102-34 | 102-44 | 103-1 | 103-2
HUMAN RIGHTS AND
SECURITY
Reflected in our values is respect for the rights of the
people who work on our behalf and those who live in the
communities near our operations. Our Code of Business
Conduct and Human Rights Policy clearly show our
support for the principles of the Universal Declaration
of Human Rights and affirm our respect for human rights
through our business conduct and management practices.
We respect the dignity of all people, along with their
cultural traditions and values. Our fair labour practices
include zero tolerance for forced, compulsory and child
labour, and we work to prevent any infringement upon
human rights within our sphere of influence.
The UN Guiding Principles on Business and Human
Rights provides a blueprint for businesses that includes
a public commitment, a due diligence process that
assesses risks, and a process for providing a remedy to
anyone who is impacted. In 2018, we held workshops
with the business units and with outside groups to
define practical ways to integrate human rights,
community and security risk assessments and processes
into our enterprise risk management program. Insights
from the workshops were used to develop a social risk
framework. The business units began testing the
practicality and usefulness of the framework at the end
of 2018. Feedback will be incorporated into a final
framework that we plan to implement in 2019.
At our corporate office, our Vice President of Corporate
Social Responsibility led an interactive session with
employees to discuss the rights each employee has as an
individual and the role they play in respecting the rights
of others and as representatives of Hudbay.
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We conduct high-level corporate risk assessments to rank
the security risk level of each operation, and we develop
detailed risk assessments at each location to define
specific actions. Activities at each risk level include:
• Low risk – an annual review of the corporate risk
assessment and an annual advisory site visit; a local
social risk assessment; training security management
on the VPs; and raising awareness of the VPs with
contracted private and public security personnel
• Medium risk – at least one annual audit of site security
practices using the Global Compact Canada VPs
framework, and at least one annual advisory visit; a
structured program at the site, including training of
security personnel, to implement the VPs; a grievance
mechanism to record and respond to security
complaints; and active participation in forums that
promote security and human rights
• High risk – an annual audit by an independent
Voluntary Principles Organization (VPO)–recognized
auditor; a grievance mechanism to record and respond
to security complaints; and engagement with national
and international organizations on security practices
Currently, all of our operating and exploration sites are
considered low risk with the exception of Constancia in
Peru, which is classified as medium risk.
As a member of the Mining Association of Canada (MAC),
we annually report on how our risk assessment approach
and security-related management systems align with the
VPs in MAC’s TSM Progress Report.
Concerns about human rights issues within our business
can be reported via site grievance mechanisms or directly
to our Board of Directors through our corporate website
or third-party ethics hotline. In 2018, there were no
human rights issues raised or reported through our
Board, hotline or site grievance mechanisms.
SECURITY PRACTICES
Respecting the human rights of neighbouring
communities while providing a secure work environment
and protecting our employees and contractors defines
our security approach.
We recently implemented a new Security Policy and
Corporate Plan that expands on the commitments in our
Human Rights Policy and details how these commitments
are consistently put into practice. This policy recognizes
the importance of measured and appropriate responses
GRI 102-12 | 102-29 | 103-1 | 103-2
to security threats in reducing conflicts and building
relationships with communities and other stakeholders.
The operations, projects and exploration sites where we
employ security personnel apply the Voluntary
Principles on Security and Human Rights (the VPs),
which prioritize relationship building and provide a
framework for maintaining safety and security within an
operating context that ensures respect for human rights
and fundamental freedoms. All contracts with security
services include a requirement to work within the VPs
framework as well as the UN Code of Conduct for Law
Enforcement Officials and the UN Basic Principles on
the Use of Force and Firearms by Law Enforcement
Officials. In cases where we use public security
personnel, we make every effort to ensure they are
aware of and guided by these frameworks.
Hudbay 2018 Annual and CSR Report
| CSR Approach
31
TAILINGS MANAGEMENT PROTOCOL
TAILINGS GOVERNANCE CHARTER
As a member of MAC, we are implementing TSM’s
updated Tailings Management Protocol, which builds
on a continual improvement process for tailings
management to achieve the goal of zero catastrophic
failures of tailings facilities and no significant adverse
effects on human health or the environment. The
protocol emphasizes management processes, senior
executive oversight, and expert third-party reviews that
ensure appropriate technical standards of construction,
maintenance and operation.
We have begun implementing the requirements in the
updated protocol – including expansion of third-party
independent peer review boards to all locations – and
each of our operating entities will report against it
beginning with our 2019 assessment. We also adhere to
TSM’s Aboriginal and Community Outreach protocol,
which evaluates our engagement with communities of
interest on potential risks that our activities may pose,
including tailings management.
In 2018, we developed a Tailings Governance Charter to
further strengthen our internal governance processes
related to tailings management. The charter details
existing controls, including a Tailings Management
System at the site or business unit that supports day-to-
day activities – such as planning, monitoring, risk
identification and reporting – associated with the
management of tailings construction and operation. Our
Corporate Tailings Governance System includes a Tailings
Governance Team (TGT) composed of individuals from
the business units and relevant corporate functions. The
mission of the TGT is to serve in a monitoring and
advisory role to assure the CEO, COO and Board of
Directors that appropriate processes are in place and
that all TSFs are constructed and operated in a manner
that protects public health and safety.
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Because periodic social unrest has affected certain
mining projects in southern Peru, Hudbay participates in
multi-stakeholder initiatives. We engage with national
government officials, local authorities and community
leaders to address local concerns and issues before they
become larger conflicts. Our Constancia security
superintendent meets with security managers from
neighbouring mines as part of a security group, known as
SEMSUR, and discusses best practices, experiences and
emerging issues. These meetings provide opportunities
to promote the VPs and encourage other operations to
implement them.
At our Rosemont project in Arizona, we have a security
superintendent on-site and procedures in place in
preparation for entering the construction and operations
phases. Rosemont’s Safety and Security Work Group
engages with local law enforcement and emergency
response agencies on project developments, safety and
security incidents, and establishing processes to use in
the event of an emergency.
GUATEMALA CIVIL LAWSUITS
Hudbay is named in three civil lawsuits relating to
alleged events prior to 2010 in Guatemala, where the
Company owned a controlling interest in Compañía
Guatemalteca de Níquel (CGN). Information about the
litigation is posted on our website.
TAILINGS STEWARDSHIP
Mine tailings are the fine-grained material that remains
after the minerals have been extracted from the
crushed ore. Tailings can be solid or a slurry of fine
particles and water and are contained in engineered
tailings storage facilities (TSFs) that are designed to
safely contain the waste.
GRI 102-29 | 103-1 | 103-2
Hudbay 2018 Annual and CSR Report
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ON-THE-GROUND APPROACH TO
TAILINGS STEWARDSHIP
Seven current tailings and water retainment structures/
facilities – four in our Manitoba Business Unit and three
at our Constancia operation in Peru – are managed in
accordance with the requirements of the Charter. Of
these, our Flin Flon tailings impoundment system (FFTIS)
uses the upstream construction design method. Part of
the FFTIS, which has been in service for decades, was
constructed using the upstream method, but the dam’s
north and west expansions have been constructed using
the downstream method.
Our Anderson tailings management facility in Snow Lake
has historically used subaqueous deposition of tailings
in Anderson Lake. In order to accommodate ongoing
production from our Lalor mine, we are in the process of
raising the dam around Anderson using the downstream
method. Our Constancia tailings facility was constructed
using modern methods and international standards.
In addition to helping identify and address areas for
improvement, the reviews and inspections in 2018 found
all facilities and structures were in compliance with our
standards and best practices. In our Manitoba Business
Unit, where some of our tailings storage facilities were
built 80 years ago, we worked with our engineer of
record to identify opportunities to proactively upgrade
facilities and improve dam stability over the next two
years, particularly in the areas previously constructed
using the upstream method.
These include reduced requirements for water
consumption and land and the ability to conduct
concurrent reclamation. Dry-stack also nearly eliminates
the risk of groundwater contamination and catastrophic
tailings dam breaches. Rosemont’s state-of-the-art
dry-stack tailings facility will be one of the largest in the
world, requiring half the water for twice the production,
thereby establishing new standards for responsible mining.
STAKEHOLDER
ENGAGEMENT
The perspectives of employees, shareholders, suppliers,
government officials, communities, rights holders and
other key stakeholders help us make better decisions
and continuously improve. All individuals and groups
who have an interest in, may be affected by, or believe
they may be affected by our activities and business
decisions are considered stakeholders. Through
transparent, ongoing dialogue with our stakeholders, we
work to better understand their needs and expectations.
The frequency and channel of engagement varies
depending on the stakeholder, topic or concern.
Our Stakeholder Engagement Standard and the supporting
guidance document detail the requirements and
expectations for understanding stakeholder perspectives
and addressing concerns. Our Shareholder Engagement
Policy promotes open and sustained dialogue between our
Board of Directors and shareholders.
To collectively work on issues and solutions, we
participate in industry associations and multi-
stakeholder initiatives that bring together
organizations and individuals to share expertise, lessons
learned and best practices.
The Manitoba and Peru business units maintained their
ratings (AA and A, respectively) across all the tailings
management indicators in the 2018 TSM Progress
Report. Both business units are updating their tailings
management processes in preparation for reporting
against the new requirements in the updated protocol.
At our Rosemont project in Arizona, we plan to use an
alternative method of tailings disposal called dry-stack or
filtered tailings. This method – which involves dewatering
tailings prior to placing them in a storage facility – offers
numerous advantages over other tailings storage options,
provided climactic conditions support the technology.
GRI 102-15 | 102-21 | 102-29 | 102-33 | 102-34 | 102-40 | 102-42 | 102-43 | 102-44 | 103-2
Hudbay 2018 Annual and CSR Report
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CEO Message
The following table lists key stakeholders and how we engaged with them in 2018:
2018 ENGAGEMENT ACTIVITIES AND TOPICS
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Priorities and concerns
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CSR Performance
Shareholders, debtholders, investors and analysts
• Conferences (12 events)
• Investor meetings and conference calls
(more than 275 events)
• Closure of Reed mine and upcoming closure of the
777 mine, mill and zinc plant in Flin Flon
• Rosemont permitting
• Annual Meeting of Shareholders
• Lalor gold results
• Analyst and investor site visit to Constancia operation
• Pampacancha land access
Employees and contractors
• Quarterly CEO email messages
• Senior management site visits
• Mergers and acquisitions
• Health and safety
• Work processes
• Town hall meetings
• Business performance
• Orientation and training programs
• Understanding of compensation and benefits
• Indigenous cultural awareness workshops
• Opportunities for personal development
• One-on-one and small group manager/staff meetings
• Environmental requirements
• Video messages
• Training for policies, permits or other requirements
• Health and wellness committees and activities
• Hudbay intranet
Unions
• Meetings with union leaders on outstanding issues
• Mobility
• Formal grievance processes
• Seniority
• Joint health and safety committees
• Outstanding grievances
• Health and safety
• Closure
GRI 102-15 | 102-21 | 102-29 | 102-40 | 102-43
Hudbay 2018 Annual and CSR Report
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CSR Performance
Stakeholder group
How we engaged in 2018
Priorities and concerns
Local communities and Native American/
indigenous groups
• Community information and consultation meetings/
• Development project updates
dialogue tables
• Community partnerships
• Site tours and open houses
• Site grievance/community response processes
• Community relations offices
• Cultural awareness workshops and other training
• Community and area activities and investment
• Safety and environmental concerns
• Land use
• Water use and quality
• Local employment and procurement
• Training programs for community members
• Cultural protection, awareness and dissemination
• Educating employees on intercultural competency,
conflict resolution, human rights and anti-racism
• Future operations plans (operating life)
Customers
• Direct contact
• Achieving agreed terms of delivery for products
• Industry and business forums
• Provision of information on product safety and
product origin
• Compliance with environmentally and socially
responsible performance and risk management
GRI 102-15 | 102-21 | 102-29 | 102-40 | 102-43
Hudbay 2018 Annual and CSR Report
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MATERIALITY
We define our material CSR issues as those economic,
environmental and social issues most important to our
stakeholders and to our business.
In 2017, we carried out a review of our priorities in
relation to what we had been hearing from our key
stakeholder groups. The conclusion was that there was
no significant change to our current materiality model.
The review evaluated the issues related to environment,
health, safety and community (EHSC) that are most
significant to Hudbay in terms of business impact and
degree of stakeholder interest.
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MATERIALITY MATRIX
During the 2017 materiality review, 11 priority issues were confirmed. Click on each issue in the diagram below to learn
how we are managing it and how we performed in 2018.
Human Rights
Water
Land and Biodiversity
Local Market Presence
Ethics
Health and Safety
Stakeholder Engagement
Tailings
Economic Performance
Employee Relations
Aboriginal/Indigenous
Relations
T
S
E
R
E
T
N
I
R
E
D
L
O
H
E
K
A
T
S
BUSINESS IMPACT
Environment
Labour
Society
Governance
Economic
GRI 102-46 | 102-47 | 103-1
Hudbay 2018 Annual and CSR Report
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36
The following table indicates how our priority issues align with the GRI Sustainability Reporting Standards
reported in the GRI content index:
BOUNDARIES
CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
Priority issue
Ethics
Human rights
Stakeholder engagement
Indigenous relations
Health and safety
Employee relations
Economic performance
Local market presence
Land and biodiversity
Water
Tailings
GRI 102-46 | 103-1
GRI Standards
Ethics and integrity
Anti-corruption
Security practices
Human rights assessment
Stakeholder engagement
Rights of indigenous peoples
Occupational health and safety
Labour/management relations
Freedom of association and collective bargaining
Non-discrimination
Economic performance
Indirect economic impacts
Procurement practices
Employment
Closure planning
Resettlement
Biodiversity
Water
Effluents and waste
We conducted the materiality review on the initial
boundary assumption of activities and facilities within
Hudbay’s management control (as described in the
Our Company section of this report). Participants in the
review process were then asked for cases in which
boundary limits should be adjusted for specific aspects.
Based on stakeholder expectations and business risk,
the following exceptions were deemed appropriate:
• Safety statistics are tracked and reported for all
contractor activities under Hudbay contracts
and supervision
• Environmental incidents related to transportation
between Hudbay locations and local supplier
activities are generally tracked, reviewed and
reported by Hudbay
• Grievances are accepted and investigated with respect
to local contractors and security activities related to
Hudbay, and are included in grievance numbers and
characterization in this report
• Scope 2 greenhouse gas emissions are calculated
and reported
Exploration sites have special considerations in
our reporting:
• Sites for which we do not maintain managerial control
are excluded
• Corporate exploration with managerial control over
the site is included and reported individually
• Business unit exploration with managerial control
over the site is included and embedded in the business
unit numbers
Hudbay 2018 Annual and CSR Report
| CSR Approach
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RESPONSIBLE SUPPLY CHAIN
Mining is the first stage of a long supply chain that
converts mineral resources into products that meet the
needs of everyday life.
We focus our supply chain responsibility efforts on
activities where we can have the greatest influence: our
own operations, contractors working at our sites, local
suppliers, and Hudbay products up to the point from
which they are shipped (in Manitoba at the plant gate,
and in Peru at the port loading facility). Our legal
function is responsible for conducting supplier due
diligence to mitigate third-party risk, which is then
reviewed by our internal audit function.
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CSR Performance
We seek suppliers that share our values and work in
partnership with us to continuously improve our
performance. Any unethical, unlawful or irresponsible
acts and behaviours can reflect poorly on Hudbay and
can impact our ability to sustain and grow the business.
Our Supplier Code of Conduct addresses these risks,
stating the required standards of conduct expected by
our suppliers. These include:
• Reading, accepting and complying with the Supplier
Code of Conduct and all applicable policies
• Complying with all applicable laws, rules
and regulations
• Conducting business honestly, ethically and in
accordance with social codes
• Complying with anti-corruption laws and informing
Hudbay of any conflicts of interest
• Protecting confidential information
• Respecting human rights and observing Hudbay’s
Human Rights Policy
• Establishing practices and procedures that protect the
health and safety of workers and the environment
• Accepting Hudbay’s supplier due diligence process
• Reporting suspected violations of the Supplier Code of
Conduct and applicable compliance policies by any
supplier or Hudbay personnel
GRI 102-9 | 102-16 | 103-1 | 103-2 | 204-1
Hudbay 2018 Annual and CSR Report
| CSR Approach
38
The IMO specifies hazard classification criteria for bulk
cargoes, and the International Convention for the
Prevention of Pollution from Ships (MARPOL) imposes
restrictions on the disposal of bulk cargo residues
classified as “harmful to the marine environment” (HME)
under the amended Annex V of the MARPOL convention.
Hudbay engaged the European Copper Institute (ECI) to
determine the MARPOL classification for Constancia’s
copper concentrates. From this study and others, all
Hudbay copper concentrates have been determined to
not be HME.
SUPPLY CHAIN PERFORMANCE
PRODUCTS
CEO Message
Our Feature Stories
The direct supply chain for our copper concentrate and
zinc metal products originates in Hudbay’s mines in
northern Manitoba and Peru.
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
The indirect supply chain for energy, goods and
services used in transforming ore and concentrate into
products includes thousands of suppliers, who provide
operating and maintenance supplies, energy and fuels,
and capital goods:
• In Peru, our top 50 suppliers accounted for 86% of our
spending, and 97% of our spending was with suppliers
based in Peru.
• In Manitoba, our supplier base relates to production
operations and capital projects. Our top 50 suppliers
represented 74% of our spending in 2018, and 96% of
spending was with suppliers in Canada. These suppliers
provided goods and services such as engineering
services, electricity, spare parts for equipment,
underground haul trucks and other capital equipment.
Hudbay’s top 10 suppliers in 2018, representing 44% of
procured value, were (in alphabetical order):
CORPORACION PRIMAX S.A.
CN (CAD)
DUMAS CONTRACTING LTD.
ENEL GENERACION PERU S.A.A.
FERREYROS SOCIEDAD ANÓNIMA
MANITOBA HYDRO
MOLY-COP ADESUR S.A.
NEUMA PERU CONTRATISTAS GENERALES S.A.C.
NEWREST PERU S.A.C.
SERVOSA CARGO S.A.C.
GRI 102-6 | 102-9 | 103-1 | 103-3
The two main products we produce are copper and zinc.
Copper is essential in today’s society, serving as a vital
component in electronics and electrical transmission. In
health care, new applications for copper are being
identified due to its ability to kill bacteria. Zinc is vital to
the endurance of metals in manufacturing. Both metals
are important to the renewable energy industry.
Our copper concentrate and zinc metal are produced at
operations in Canada and Peru:
• Hudbay sold 63% of its copper concentrate to traders
and smelters that delivered to customers in Asia
(including India) and 37% to traders and smelters in
the Americas and Europe. From there, several stages
of smelting and refining the copper content ultimately
result in 99.99% pure copper, the building block for
many of life’s essentials.
• We ship cast zinc metal produced at our Flin Flon
zinc plant by rail and truck to industrial customers
throughout North America (primarily to galvanizers
who use it to protect steel from corrosion).
The safety data sheets (SDS) that accompany copper
and zinc products provide details of their composition,
toxicology, handling, storage and exposure issues. We
further meet our product stewardship commitments
by collaborating with governments and industry
associations, including the International Zinc Association
and the European Copper Institute, to guide our
compliance with international requirements such as
those provided by the International Maritime
Organization (IMO).
Hudbay 2018 Annual and CSR Report
| CSR Approach
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SUSTAINABLE DEVELOPMENT GOALS
Hudbay recognizes the opportunity the mining industry
has to positively contribute to the UN Sustainable
Development Goals (SDGs), and it strives to be aligned
with the goals. There are a number of SDGs for which
we consider the industry a natural fit for taking on a
leadership role, and others where we feel our company
can work alongside government, supporting initiatives.
Taking this into consideration, the following table
outlines the SDGs most relevant to our business and
where the topics are discussed in this report.
CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
Sustainable Development Goals
Link to topic
Business and Financial Review
Our People
Social Impact > Our Approach
• Local Hiring and Procurement
Social Impact > Peru
• Building and Diversifying Local Economies
CSR Approach > CSR Governance
• International Best Practice Standards
• Industry Involvement
Our People
• Hudbay Women’s Network: Fostering Gender Diversity in Mining
Key Performance Data Table (Employees)
• Workforce Diversity
Environment
• Water
CSR Approach > Responsible Supply Chain
• Supply Chain Performance
• Products
GRI 102-12
Hudbay 2018 Annual and CSR Report
| CSR Approach
40
Sustainable Development Goals
Link to topic
CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
GRI 102-12
Environment > Our Approach
• Land and Biodiversity
• Closure and Reclamation
Environment > Manitoba
Environment > Peru
• Conserving and Protecting Biodiversity
Key Performance Data Table (Environment)
• Land Use
• Sites Requiring Biodiversity Management Plans
• Habitats Protected or Restored
• IUCN Red List Species
CSR Approach > Human Rights and Security
• Security Practices
Our People > Our Approach
• Health and Safety
• Unleashing Potential in a Trust-Enhancing Organization
Environment
• Total Greenhouse Gas Emissions Chart
Environment > Our Approach
• Energy Use and Greenhouse Gas
Recognizing that the SDGs represent national-level governmental commitments, we will continue to work to design
our activities with relevant goals and to help connect national processes to local needs as represented in SDG 17.
Hudbay 2018 Annual and CSR Report
| Our People
41
CEO Message
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CSR Performance
LOST TIME ACCIDENT FREQUENCY
(lost time accidents per 200,000 hours worked)
2015
2016
2017
0.3
0.3
0.3
2018
0.3
LOST TIME ACCIDENT SEVERITY
(days lost per 200,000 hours worked)
2015
11.4
2016
2017
9.3
8.4
2018
14.3
OUR PEOPLE
We aim to develop a skilled workforce that reflects the communities in which we live and work, and to provide a safe,
healthy and rewarding workplace where people can fulfill their potential.
15%
indigenous
employment in
Manitoba
70%
of full-time employees
represented by
trade unions
16%
overall female
employment
GRI 102-8 | 103-1
CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
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Social Impact
Environment
CSR Performance
Hudbay 2018 Annual and CSR Report
| Our People
42
When Jodi Brasch joined Hudbay in 2013, she was the
Company’s first female underground worker in Snow
Lake in more than 40 years. Five years later, Jodi was
selected to represent Canada as a member of the
first-ever all-female mine rescue team to compete at
the International Mine Rescue Competition (IMRC).
Overall, the Diamonds in the Rough team placed 15th,
ahead of Canada’s other team at the competition – an
all-male team that finished in 18th place – and won the
people’s choice award and other commemorations
recognizing them as the first all-female team to compete
at an international level.
STORY
HUDBAY’S JODI BRASCH
COMPETES AS MEMBER OF
WORLD’S FIRST ALL-FEMALE
MINE RESCUE TEAM
The team, called “Diamonds in the Rough”, competed
against 24 other teams from 11 countries over five days.
Events included a mine rescue simulation, a written
exam, first aid and firefighting skills tests and a relay race
where competitors had to flip a 265-pound tire and toss
a 110-pound sandbag over a 1.5-metre wall. For the mine
rescue simulation, which took place underground, the
team were the first women to ever go underground in
Russia, and they ultimately finished the event among the
top five.
“One of the best parts was that we had several team
members from various teams tell us they were going to
go home and tell their daughters they can do anything,
which is the best compliment ever,” said Kari Lentowicz,
the team’s co-founder and coach.
Our Constancia operation in Peru undertook a new
initiative during the year to reduce injuries and safety
incidents and help create a stronger safety culture.
Based on an analysis of safety statistics and trends, the
largest contributor to accidents was found to be poor
decision-making due to taking shortcuts and spending an
inadequate amount of time assessing risks. To address
this finding, we implemented the Behaviour-Based
Safety (BBS) program – a process management tool
aimed at actively engaging employees through peer
observations and positive feedback to increase safe
habits and behaviours in the workplace.
In June, we worked with outside consultants to create
a program customized to the environment and the
specific needs of our Constancia operation. Workshops
were held to design the program, establish the vision
and mission of the program, and create a plan for
implementation among the mine and plant management
teams. The plan included training observers on how to
give effective feedback on safety performance.
At the end of 2018, more than 350 individuals in mine
operations and the processing plant had received BBS
observer training. The number of observations in mine
operations grew from 64 in the first month of the
program to 401 in December, while in the processing
plant the number grew from 28 to 62. Efforts to increase
participation and improve the BBS process are planned
for 2019.
STORY
CONNECTING BEHAVIOURS
TO SAFETY
Hudbay 2018 Annual and CSR Report
| Our People
43
CEO Message
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Business and
Financial Review
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Social Impact
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OUR APPROACH
HEALTH AND SAFETY
Nothing is more important than the safety and health of
our people. Throughout our operations and locations,
we work to enforce policies and practices that ensure a
healthy and safe work environment.
Our Environmental Health and Safety Policy states our
commitment to control risks, transparently report our
performance, and continuously strive for a healthier
workforce and safer workplace. Within two years of
reaching commercial production, all operations are
required to be certified to OHSAS 18001, an
internationally accepted standard for occupational
health and safety management systems, and this
certification must be maintained throughout the life of
operations. We apply the Mining Association of Canada’s
(MAC) Towards Sustainable Mining (TSM) Safety and
Health protocol, which assesses and measures our
performance. Regular monitoring, self-assessments and
tri-annual third-party verifications ensure operations
remain in compliance with these standards and protocols
throughout the life of the operation.
Building a culture dedicated to zero harm requires that
everyone who works at our sites has the knowledge,
skills and equipment needed to work safely and that our
leaders empower their teams and actively encourage
them to speak up, especially when they have concerns.
A number of initiatives – such as the supervisor mentor
program in Manitoba – aim to support supervisors in
effectively engaging with their teams so that everyone
understands the risks associated with tasks and the work
environment. Our safety programs provide training for
the activities undertaken, whether at an operation,
exploration site or office location, or for visitors to the
mine site. Emergency response teams receive specialized
training that prepares them to mobilize quickly and
effectively during an event at a mine site.
GRI 103-1 | 103-2
Other efforts to continuously improve our safety and
health performance include the Visible Felt Leadership
program, where leaders engage with employees and
take accountability for their teams’ safety, and our
occupational health programs, which monitor exposures
to health risks such as hearing loss and illnesses caused
by airborne agents. As an active member of the Mining
Safety Round Table, we engage with other mining
companies throughout the year to share lessons learned
and best practices, with the aim of raising the safety
performance of the entire industry.
While no workplace fatalities have occurred at any of our
operations, projects or exploration sites in recent years,
we continue to drive improvements in our ability to
prevent fatalities. Through critical risk and critical control
(CRCC) management plans, our operations identify top
fatality risks and the controls that are most effective in
managing them.
We record, investigate and analyze incidents and
conformance with our standards using our company-
wide integrated information system. Significant
incidents, based on criteria set by the Board, are
reported to our Board quarterly. High-potential
incidents – those that could have resulted in a fatality
or serious injury – are registered in our system and
investigated in depth to analyze the cause as well as the
controls and corrective actions needed to prevent a
similar incident from happening again.
Hudbay 2018 Annual and CSR Report
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44
CEO Message
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Our Company
Business and
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Social Impact
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EMPLOYEE RELATIONS
We recognize that to be an employer of choice
everywhere we operate, we must offer fair wages and
compensation, and provide opportunities for
development and career growth.
Our Code of Conduct states our commitment to
responsible workplace and business practices. This
includes a non-discriminatory and harassment-free
workplace. We do not tolerate any form of violent
behaviour, and personnel are expected to perform their
job duties in a professional manner, free from the effects
of drugs and/or alcohol.
Approximately 1,660 full-time, part-time and Peru
contract employees (70% of our workforce) are
represented by a union, and we respect the right of
our employees to join a union and engage in the
collective bargaining process. We work to constructively
engage with the eight unions that represent our
employees, and to partner with them on solutions that
create mutual benefit.
We engage employees and keep them informed about
important business matters through various channels
and tools. These include town hall meetings, workshops,
internal emails and videos from senior leaders, and our
company intranet, where we post employee-focused
news and resources.
With a large number of employees eligible for
retirement, especially in our Manitoba Business Unit,
our retirement readiness programs provide information
and tools that prepare employees for success once they
leave the workforce.
At the corporate office, we conducted three pilots:
a performance effectiveness process that involves
ongoing conversations between managers and
employees with a year-end performance evaluation
process that improves effectiveness and fairness; a
coaching program where managers learned to ask
questions and listen in a way that creates awareness and
invites action; and a program that allowed participants to
explore their behaviour styles and motivators to increase
self-awareness and enhance our abilities to work
collaboratively by appreciating and understanding
differences.
UNLEASHING POTENTIAL IN A
TRUST-ENHANCING ORGANIZATION
Bringing to life our values and transforming our culture
to attract and retain the talent needed to execute our
strategy requires us to evaluate and enhance the way we
work. Our OneHudbay initiative – “How we work” – is a
strategic approach to efficiently grow the business and
clearly link the Company’s mission, vision, values and
strategic goals. From an organizational perspective,
OneHudbay delivers an organization with the
appropriate number of levels, and with highly effective
lateral working relationships and leadership practices,
which results in all employees contributing to their full
potential and, ultimately, to the success of the Company.
In 2018, we began the foundational work of embedding
OneHudbay throughout the business. We held workshops,
engaged leaders and employees, and developed
processes for sustainment. The ongoing work defines
and reinforces how we work and support one another in
an accountability-based organization. We also published
a series on our intranet called “Speaking from
Experience” in which leaders shared their thoughts and
experiences from working in organizations of this nature.
In 2018, we continued to enhance the manager once
removed (MOR) concept, which we expect to formalize
in 2019. The purpose of MOR is to link the entire
organization through conversations managers have with
the people who report to their direct reports. This
three-tiered approach is designed to set context, build
trust and develop our employees.
To support OneHudbay, as well as other human
resources efforts, we created a road map for a
comprehensive human capital management system.
The road map establishes a common, integrated
platform and processes across the business during
every phase of an employee’s career. The system, which
will be based on SAP’s SuccessFactors software, includes
a variety of modules (e.g., recruiting, onboarding,
performance management, learning and development,
succession planning), and integrates the data in a
manner that reduces complexities, improves
collaboration and helps decision-making in areas such
as succession planning.
GRI 102-8 | 103-1 | 103-2
Hudbay 2018 Annual and CSR Report
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45
CEO Message
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Our Company
Business and
Financial Review
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Social Impact
Environment
CSR Performance
DIVERSITY AND INCLUSION
We recognize that employing people with different
backgrounds, experiences and perspectives makes us
stronger and fosters collaboration. Our OneHudbay
approach provides a crucial foundation for attracting
and retaining a diverse range of top talent. By
embedding our values of dignity and respect, caring,
openness and trustworthiness throughout the
organization and clarifying roles and accountabilities,
we aim to further foster trust, which supports a more
open and diverse workforce.
Through our support of the Catalyst Accord 2022 and
the 30% Club, both of which call for the advancement
of women in business, we are working to increase
opportunities for women. Female representation on
our Board of Directors has achieved the 30% or higher
target, and we are working to increase the percentage
of women in management. In 2019, we will begin
developing an umbrella diversity and inclusion policy.
Our mission states that we intend for the communities
in which we operate to benefit from our presence. To
that end, our operations and corporate office aim for
a workforce that reflects the communities near our
operations. Each site is committed to hiring from the
local communities and indigenous groups near our
operations and exploration activities.
GRI 103-1 | 103-2
Hudbay 2018 Annual and CSR Report
| Our People
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MANITOBA
Approximately 60% of our total employee population
works in our Manitoba Business Unit, primarily at two
centres of operation – Flin Flon and Snow Lake. At
year-end, Reed and 777 employed 315 people, and Lalor
employed 337, down 9% and up 20%, respectively,
compared to the previous year. Of the employees who
work at Lalor, 232 (69%) live in Snow Lake. 15% of our
employees in Manitoba identify as indigenous and 17%
are women.
ADDRESSING THE IMPACT OF
MINE CLOSURE
In Manitoba, we are addressing a challenge that all mines
face when they reach the end of their mine life. The
Reed mine closed in 2018, and the 777 mine, Flin Flon
mill and zinc plant are expected to close in 2022.
Meanwhile, in Snow Lake we are increasing production
rates at Lalor and planning the refurbishment of the
New Britannia mill to process the Lalor gold and copper-
gold zones. The OneHudbay principles are being applied
to the Manitoba organization to address these changes
and to ensure we have the right people in the right roles
to efficiently and responsibly execute our plan. Our
decisions and actions are further driven by our values.
One of our primary focus areas is ensuring we treat
people fairly as we wind down operations in Flin Flon.
The closure of Reed provided us an opportunity to
demonstrate this commitment as we worked to reassign
all workers to either Snow Lake or Flin Flon, resulting in no
layoffs. At Flin Flon, we continued with the video series
launched in 2017 that featured Hudbay’s CEO and other
company leaders providing updates on the mine’s future.
The videos were supported by face-to-face engagement
between site leaders and employees. Senior leadership is
working toward finalizing and communicating a detailed
path forward for Flin Flon by mid-2019.
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The path forward will reflect feedback from the unions
that represent a majority of the workers at Flin Flon.
Solutions being discussed and implemented include
identifying the future workforce requirements at Snow
Lake, shifting contractor roles to employees, and
providing training for the skills required for open roles.
Our improved relationships with the unions are reflected
in part by a reduced number of grievances, the
elimination of a grievances backlog, and having no
grievances escalate to arbitration during the year.
IMPROVING SAFETY PERFORMANCE
Across the business unit, our safety performance
improved for the year, with our lost time accident (LTA)
frequency down by 0.2 and our lost time accident
severity also down by 0.2. However, in August we had a
fall-of-ground incident at our Lalor mine when a large
drift wall failed, falling onto a scoop. While the scoop
operator was not injured, the outcome might have been
much more serious. We conducted an Incident Cause
Analysis Method (ICAM) investigation to identify the
corrective actions needed to prevent future incidents
of a similar nature from happening.
GRI 102-8 | 103-2
Hudbay 2018 Annual and CSR Report
| Our People
47
our local hiring efforts that began in 2018 by holding
seminars and attending job fairs in some of the more
remote communities in Manitoba. We are also
developing an awareness campaign to highlight the
value of self-declaring one’s indigenous heritage.
At the 2018 Manitoba Provincial Mine
Rescue Competition, Hudbay’s Snow Lake
team came in first place. Four teams of
six individuals were evaluated against an
underground and first aid mine rescue
mission and a written test. The team will
represent Hudbay at the Western Mine
Rescue Championship in 2019. Lalor’s Jodi
Brasch also competed in the International
Mine Rescue Competition as part of the
world’s first all-female mine rescue team.
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In 2018, our Manitoba Business Unit held two workshops
to reinforce our safety values, review safety
accountabilities and ensure everyone was taking the
time necessary to focus on safety. During the workshops,
department managers reviewed all safety procedures
(e.g., permits, audits) to determine if the right safety
work was being done at the right level. Outcomes from
the workshop included three new actions: field risk
assessments, a supervisor mentor program and safety
calendars. Details on these actions include:
• The field risk assessments comprise four parts that are
to be conducted by every employee at the beginning
of each shift. They include checklists for employees to
assess the work environment and task, make sure they
meet the conditions to work safely, and, if not, to
speak up and ask a supervisor for support.
• Through the new supervisor mentor program,
members of Hudbay’s health and safety department
train frontline supervisors at the mine site, helping
them identify and address certain safety issues
through more effective and engaging crew meetings
that provide employees a greater understanding of
the risks.
• The safety calendars detail by job role which safety
activities need to be done, the frequency of each task,
the actions required, and any control documents or
compliance requirements associated with the activity.
The safety calendars are incorporated into the
personal calendars of frontline supervisors and their
team members, helping to keep safety top of mind.
We updated our internal process for injuries that
potentially restrict the ability to work in an effort to
improve employee engagement and educate medical
professionals and regional health authorities on how
best to accommodate injuries in the workplace in a
manner that aids in the employee’s recovery.
Our wellness committee, which meets monthly, includes
representatives from our human resources and health
and safety departments, union co-chairs, and external
members including medical professionals. In 2018, the
committee held a wellness fair for employees and began
developing a wellness passport program to encourage
healthy behaviours. In 2019, we will develop a robust
mental wellness program to support the transitional
work related to the closure of the Flin Flon operations.
One element of the program is a two-day mental first aid
course for supervisors to help them recognize and
properly address problems.
SUPPORTING A MORE DIVERSE
WORKFORCE
To support the success of female employees and
encourage more women to join the mining workforce,
two female employees in our Manitoba Business Unit
founded the Hudbay Women’s Network (HBWN), an
employee-led voluntary resource group. The HBWN’s
founding principle is gender inclusion, and its goal is
to support, connect and empower Hudbay employees
by providing a vehicle for professional growth and a
strong voice. We feature the HBWN in the story
“Hudbay Women’s Network: Fostering Gender
Diversity in Mining”.
Our approach to recruiting includes a strong focus on
hiring among the indigenous communities near our
operations. In 2018, we developed an indigenous hiring
project at Lalor, partnering with the Manitoba
government’s Northern Manitoba Sector Council to
recruit 12 new employees from the Pimicikamak Cree
Nation near Cross Lake. The project includes training, an
evaluation of soft skills (e.g., managing personal finances
and work requirements) and engagement with the
employees’ families to make sure they are supportive of
the work and work schedules. In 2019, we will continue
GRI 103-2
Hudbay 2018 Annual and CSR Report
| Our People
48
STORY
HUDBAY WOMEN’S
NETWORK:
FOSTERING
GENDER
DIVERSITY
IN MINING
event to promote the empowerment of women in the
industry. The group is also starting a larger conversation
on workforce matters that are of particular interest to
women, such as flex hours and other small changes to
the workplace environment that better support women.
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CSR Performance
Women make up around half of the workforce
throughout Canada (Statistics Canada), but female
representation at Hudbay is only 16% (a percentage that
is consistent across the mining industry). Mining careers,
especially those at the operating sites, are often not
actively pursued by women, and Hudbay has long
recognized the challenges of attracting and retaining top
female talent.
Although the Company has initiatives in place to address
this challenge and increase female representation
throughout the business, two female employees in our
Manitoba Business Unit aimed to accelerate these
efforts by launching the Hudbay Women’s Network
(HBWN) in 2018.
Landice Yestrau, an environmental scientist, and another
female colleague began discussing in 2017 how to
address the systemic barriers women face when
pursuing a career in mining. In their free time, they
conducted a study and submitted a proposal to company
leaders to increase networking opportunities for women
through the formation of the HBWN.
“Our expectations were low when we submitted our
proposal, so it was a bit surprising when management
was genuinely very supportive,” said Yestrau. “We
thought we would face more hurdles than we did. Both
the leadership in the business unit and the corporate
office consistently support us and make sure we have
the resources we need to distribute information, gather
statistics and provide resources. It was really great and
still continues to be so.”
Today, the HBWN provides a forum for women to share
insights and experiences, participate in educational and
career development events, and support both each
other and opportunities for women at all levels at
Hudbay. Since the launch of the HBWN in April 2018, its
membership has grown from 10 to 100. The HBWN held
several events during the year, including a speaker series
called “Learning the Business”, and it hosted a public
GRI 103-2
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PERU
Our workforce in the Peru Business Unit includes staff
members at our office in Lima and those who work at
the Constancia operation. Because the mine is located in
a remote part of southern Peru, many of the operating
and support personnel live some distance away and work
multi-day shifts, staying at Constancia’s accommodation
camp during their rotation. The camp amenities include a
dining hall, a medical centre and recreational facilities.
At the end of 2018, the Peru Business Unit had
855 employees, including 165 term employees
(defined as those with contracts that end on a specific
date). Of our full-time employees, 100% are from Peru,
11% are from the local communities and 10% are
women. Around 22% of the term employees are from
the local communities of Uchucarco and Chilloroya.
During the year, we hired 201 employees from the
local communities.
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CREATING A CULTURE OF SAFETY
Our Peru Business Unit’s safety performance continued
to be strong, with only two lost time accidents (LTA)
at the mine site, related to hand injuries sustained
by contractors.
To address the causes behind the LTAs, the site
developed a course that focused on the importance of
identifying hazards and assessing risks before starting
any activity, and created communications to support the
“Taking Care of Your Hands” campaign that raised
awareness about the risks associated with work involving
manual handling and the importance of wearing
protective equipment. We also launched the Behaviour-
Based Safety program – a process management tool
created to reinforce positive behaviours and improve
our performance.
In 2019, Constancia plans to introduce anti-collision and
anti-fatigue technologies that alert an operator and help
avoid potential accidents. This technology also provides
real-time data on events related to driver fatigue that
management can review and bring to the attention of
the driver, which in turn helps the driver better recognize
signs of fatigue or distraction.
To further strengthen the business unit’s safety culture,
on the first and last Saturday of every month the site
held “Creating Culture” events that are designed to
engage employees, contractors, superintendents and
area managers on safety-related issues. All Hudbay Peru
personnel and contractors received safety newsletters
that address safety topics and high-risk tasks as well
as monthly health newsletters that discuss seasonal
health issues (e.g., flu prevention), public health
alerts (e.g., tuberculosis) and key occupational health
issues (e.g., fatigue).
GRI 103-2
Employees and contractors completed more than
30,000 hours of health and safety induction training and
over 52,000 hours toward the annual occupational
health and safety training requirement. Hudbay and
contractor supervisors also received training on using
the Incident Cause Analysis Method (ICAM) process for
conducting investigations of accidents and serious
safety events.
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ENHANCING EMPLOYEE ENGAGEMENT
As production at Constancia increases and the Company
prepares to commence mining at the Pampacancha
satellite deposit, the team in Peru focused on retention
opportunities. The business unit conducted its first
employee engagement survey to gather insights into
what factors contribute to an employee feeling engaged.
Around 77% of those who completed the survey were
generally satisfied, believing their work was meaningful
and that they trusted in the leadership and the direction
of the Company. The results highlighted further
opportunities to improve engagement among our
employees. Insights from the survey were used to
develop an action plan and retention strategy, which
will be used to develop metrics that measure progress
in engaging personnel throughout the operation.
As part of the OneHudbay effort, the business unit held
workshops, initiated work to define role accountabilities
and cascaded manager once removed (MOR) discussions,
beginning with the Vice President of our South America
Business Unit.
COLLABORATING WITH OUR UNIONS
At the beginning of 2018, a new three-year collective
bargaining agreement with the Unified Workers Union
of Constancia Hudbay (SUTRAMICOH) was ratified by
its members, establishing the working rules and other
terms and conditions of employment that apply to
approximately 35% of the employees in our Peru
Business Unit. In November, we held a workshop with
union management to provide an update on the business
and identify further opportunities for strengthening the
relationship between management and union leadership.
GRI 103-2
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ARIZONA
At the end of 2018, we had 33 employees in our Arizona
Business Unit, representing the core team preparing for
operational readiness. Prior to receiving the Section 404
Water Permit from the US Army Corps of Engineers and
approval of the Mine Plan of Operations from the
US Forest Service in March 2019, our Arizona human
resources team focused on employee retention and
engagement. Since receiving the approvals required to
begin project development, our priority has shifted to
hiring for the project’s early works program, which
involves engineering and geotechnical work and the
construction of the site’s water and power infrastructure.
Once construction commences, we plan to hire from
within the local communities and will need to fill up to
2,500 jobs during the peak of construction. We continue
to engage with local businesses, organizations and
universities to identify resources, local talent pools and
opportunities to build a pipeline of potential future
employees. Once construction is completed, Rosemont
is expected to have a 19-year mine life and to directly
employ over 500 full-time employees during operations.
To prepare for project delivery, we developed a
handbook that consolidates various human resources
policies and procedures, as well as policies specific to
the business unit. The handbook is provided to all new
employees during orientation, and each individual
must indicate in writing that they agree to comply
with the requirements.
GRI 103-2
No lost time accidents occurred during 2018. Under
the US Mine Safety and Health Act (MSHA), personnel
that work at a mine site in the US must complete a
three-day training program upon being hired and an
eight-hour refresher course every year thereafter.
During the year, all personnel maintained compliance
with this training requirement. We developed a site-
specific training program that addresses both safety and
environmental risks and considerations. The training,
which was provided to all contractors and personnel
conducting work at the project site, will be scaled once
construction commences.
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COMMUNITY INVESTMENTS AND
CHARITABLE DONATIONS
($ millions)
2015
$2.8
2016
$4.2
2017
$6.4
2018
$5.1
SOCIAL IMPACT
Hudbay’s history of successfully developing and operating mines includes making a positive impact on society through
strong community relations and investments to advance sustainable communities.
$214.8
MILLION
paid in employee
wages and benefits
$4.5
MILLION
in community
investments and
charitable donations
Expomina recognized
Hudbay Peru’s
support of dairy
processing plant
GRI 102-15 | 203-2
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The reserve communities within the northern Manitoba
region where Hudbay operates struggle with high
unemployment. Helping stimulate business start-ups and
small businesses and developing job skills within the
indigenous communities near our operations not only
helps the communities; it also benefits Hudbay by
growing the base from which we hire and increasing the
number of qualified suppliers from which we procure
services and goods. To help achieve this mutual benefit,
in 2018 we held an economic development workshop in
which individuals from three nearby communities
participated in an interactive discussion on needs,
challenges and ways to increase both access to bidding
opportunities and the awarding of contracts.
With younger generations being the fastest growing
segment of the population in the region, we also
increased efforts to engage youth and students and to
raise awareness about the economic, employment and
training opportunities our mining operations offer. In
2018, we held mine tours with students that showcased
the various careers available at our operations. In early
2019, we held a mechanics course for students that
included job shadowing our heavy-duty underground
mechanics. Other events and activities are planned for
2019 to not only help develop potential future talent for
Hudbay, but also support broader efforts to improve the
well-being of the communities near our operations.
STORY
ECONOMIC ENGAGEMENT
WITH INDIGENOUS
COMMUNITIES
At our Rosemont project in Arizona, we have contributed
around $2 million to local organizations and charities
since inception of the permitting process. In particular,
we focus on supporting STEEAM – science, technology,
engineering, environment, agriculture and math –
educational initiatives. A committee of our employees
evaluates all funding requests, which include a
description of the initiative and how it supports STEEAM.
In March 2018, we approved a proposal from the
Catalina Foothills High School’s astronomy department
that requested financial support for the hardware, tools
and raw materials needed for the school’s project to
conduct a near-space mission. The students used the
materials to design and build a spacecraft that they
launched into earth’s upper atmosphere (known as “near
space”) using a large helium balloon. The spacecraft was
equipped with electronics that gathered data such as air
temperature, air pressure, altitude, latitude, longitude,
and high-definition video and photos. The students
retrieved the spacecraft via GPS technology, and plan to
use it for future flights.
STORY
HELPING STUDENTS LAUNCH
EXPERIMENTS INTO SPACE
GRI 102-21
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OUR APPROACH
ECONOMIC CONTRIBUTIONS
Through jobs, business opportunities, taxes and
royalties, community development programs and
investments in infrastructure, we aim to support and
help advance socio-economic development in the
regions and communities where we operate.
EITI requirements and is fulfilling its broader objectives.
In Canada, the government’s Extractive Sector
Transparency Measures Act (ESTMA) aims to support
the international fight against corruption and increase
revenue transparency in the resource exploration and
extractive sector. In accordance with the Act, we filed
our annual ESTMA report, which details our government
payments for the 2017 fiscal year, in May 2018.
As required by our Code of Business Conduct and our
Statement on Anti-Corruption, all government payments
must comply with the laws of the jurisdictions where we
operate, including the Corruption of Foreign Public
Officials Act in Canada and the Foreign Corrupt Practices
Act in the US. We support the Extractive Industries
Transparency Initiative (EITI), a global standard that
enhances revenue transparency and accountability in the
extractive sector. As a member of the Peruvian Mining
Society, we support the EITI process in Peru, where the
government has implemented significant aspects of the
COMMUNITY RELATIONS
Fostering relationships based on trust with the
communities near our operations and exploration
activities is at the heart of our approach to earning
our social licence to operate. Our reputation in Peru
as a leader in community relations demonstrates
that we are on the right path, while serving as a
reminder that relationship building requires an
unwavering commitment.
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The processes and requirements for strengthening
relationships throughout the life of a mine are described
in our Stakeholder Engagement Standard. Each
exploration site, development project and operation is
required to identify relevant stakeholders, conduct an
analysis and create a stakeholder engagement plan
that establishes mutually acceptable processes with
key stakeholders. Site-based community response
mechanisms are accessible to all local stakeholders to
record complaints and grievances. We investigate all
such matters with a goal of providing timely resolutions
and remedies, as appropriate.
Our integrated software system records and monitors
engagement activities, stakeholder commitments,
community investments and action plans.
INDIGENOUS ENGAGEMENT
Our community relations and stakeholder engagement
approach includes respecting the cultures and heritage
of all communities near our locations of operation, and
ensuring we recognize the specific rights, culture and
history of indigenous peoples.
At our operations and exploration sites, we develop
archaeological monitoring and cultural resource plans,
in consultation with relevant community members and
groups as appropriate, to identify and protect any
cultural artifacts discovered at our sites. As part of our
membership in the Mining Association of Canada (MAC),
we apply the Towards Sustainable Mining (TSM)
Aboriginal and Community Outreach protocol to assess
and measure our performance in the areas of engaging
communities of interest, including indigenous groups,
in meaningful dialogue and decision-making.
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In 2018, we supported the Global Indigenous
Development Trust and its efforts to improve socio-
economic conditions for indigenous communities and
to build cross-country relationships such as learning
exchanges between indigenous leaders in Canada and
Peru. During the year, the Trust led a workshop in which
company leaders, including CEO Alan Hair, participated
in a discussion on understanding the perspectives,
expectations and aspirations of indigenous communities,
and the issues we face when working together.
LOCAL HIRING AND PROCUREMENT
We recognize that local employment and business
opportunities are high priorities for community and
government stakeholders, and meeting these
expectations can generate significant economic benefits
and create stronger relationships.
Under our Local Procurement and Employment (LP&E)
Standard, each site identifies opportunities for hiring and
sourcing goods and services from the local communities.
We engage local stakeholders to maximize local job and
procurement opportunities and often incorporate these
commitments into the community agreements that are
developed in collaboration with the local communities.
We also support government programs and efforts that
the communities have identified as a priority to develop
local capacity for both mining jobs and other livelihoods
suitable for the community. This includes investments in
agricultural industries, training and skills development
programs conducted by Hudbay and through
partnerships with universities, technical institutes and
other organizations.
COMMUNITY DEVELOPMENT
During mine development and operations, our presence
in a community can stimulate social and economic
development and can also serve as a catalyst for
diversifying the local economy to minimize the impacts
when mining operations cease.
As soon as we enter a region, we collaborate with the
communities to understand the social and economic
priorities of each community and support development
programs that address these needs. In some jurisdictions
where we operate, we have formal community
agreements that detail our commitments. For example,
in Peru the land use agreements with communities state
our commitment to invest in health, education and social
development. Multi-stakeholder committees, which
include Hudbay and local representatives, approve and
oversee the projects specified in the agreements. We
engage government agencies, community development
organizations and other partners to contribute expertise
and knowledge and strengthen the effectiveness of
these programs.
Our Community Giving and Investment Standard outlines
the requirements and process for contributions and
investments in local communities. It emphasizes
community involvement, mutual benefit and
partnerships. At our operations, community investments
are largely focused on programs, infrastructure and
socio-economic development initiatives that build
resiliency, advance sustainable livelihoods, and help
communities avoid dependency on the mine during
operations and after closure.
In 2018, we developed a corporate office giving plan to
more clearly articulate our approach to implementing
the Community Giving and Investment Standard at the
corporate level and increase the impact of these efforts.
The plan incorporates our values and includes guidelines
and requirements related to employee volunteering and
matching donations. It also formalizes our support of
Youth Without Shelter (YWS), a Toronto-based charitable
organization that provides shelter, education and
training to homeless youth. YWS was selected due to its
alignment with Hudbay’s values, the broad support of
employees, and our ability to make a positive impact on
the organization’s goals.
RESETTLEMENT AND LAND USE
We seek to avoid resettlement whenever possible.
However, when the location of an orebody determines
that resettlement is unavoidable, we follow a process
that adheres to international standards, including IFC
Performance Standard 5, which advises companies to
minimize the impact on those displaced through
measures such as fair compensation, improvements to
living conditions and support for livelihoods. Active
community engagement is essential throughout the
resettlement process. No resettlement activities took
place in 2018.
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MANITOBA
We recognize that mining activities can be a positive
socio-economic catalyst for the communities in
northern Manitoba. At the same time, when mining
operations cease, it can have a negative impact. We are
committed to building long-term relationships, creating
partnerships and developing programs to ensure a
lasting, positive impact.
CLOSING MINES RESPONSIBLY
Around 5,000 people live in Flin Flon, Manitoba, a mining
town that began to form a hundred years ago with the
discovery of the Flin Flon orebody. Hudbay’s operations
in the Flin Flon area – most recently the Reed and
777 mines – have been the primary contributors to the
Flin Flon economy. In mid-2018, Reed closed, and after
exploring all options to maximize the existing assets in
Flin Flon, the Company determined that, based on the
depletion of available ore, the 777 mine would close by
the end of 2022.
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With more clarity on the future of the 777 mine, the Flin
Flon mill and the zinc plant, we have begun to engage
with the community to develop a plan that assists with the
social and economic transition. In 2018, we met with the
Flin Flon, Creighton and Denare Beach mayors and other
local officials to present our initial closure plans and
discuss opportunities to diversify the local economy and
minimize the impacts of closure to the greatest extent
possible. We discuss these efforts in more detail in the
story “Flin Flon Closure: Transparency and Respect”.
Hudbay has a dedicated Indigenous Liaison Officer (ILO)
who works to build mutual understanding and positive
relationships between the Company and the indigenous
communities. The ILO works to bridge cultural gaps
through meetings and job fairs; support for indigenous
community activities, mine tours and events; cultural
awareness training for employees; and conflict
resolution. All Manitoba operations have stakeholder
engagement plans, and the ILO supports the completion
of the indigenous-specific plans.
BUILDING RELATIONSHIPS WITH
INDIGENOUS COMMUNITIES
Our Manitoba Business Unit engages with local
indigenous communities near our mining operations and
exploration activities.
We maintained our bronze certification level for the
Canadian Council of Aboriginal Business’s (CCAB)
Progressive Aboriginal Relations (PAR) program.
The PAR program verifies and benchmarks corporate
performance in indigenous relations in Canada in
four key areas: employment, business development,
community investment and community engagement.
However, in the 2018 TSM Progress Report, our
Manitoba Business Unit did not meet some of the
requirements within the Aboriginal and Community
Outreach protocol due to gaps in stakeholder
engagement recordkeeping, resulting in our ratings
falling below the minimum level that we expect to
achieve. To raise our performance, corporate and site
senior leaders, as well as representatives from our
environment, exploration and community relations
functions, held an internal strategy session at the
beginning of the year to identify ways to strengthen
relationships, build capacity and provide more economic
opportunities through jobs and procurement.
One outcome from the review was an improved
engagement approach during exploration work. Our
exploration team reviewed their drilling campaigns for
the next three years, identified the communities near
the exploration sites, and conducted routine visits during
which Hudbay team members held informational
sessions and performed outreach with elders and
members of each community. The approach has helped
the Company obtain the permits needed for its 2019
Hudbay 2018 Annual and CSR Report
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57
and contributions of indigenous peoples in Canada. Our
ILO led five workshops with nearly 340 employees and
external resource personnel throughout the year that
combined in-class learning with on-the-ground
experience and raised awareness of the residential
school experience and treaties. Indigenous elders were
invited to speak to employees, a growing number of
whom participated, along with their families and friends,
in four sweat lodge ceremonies over the summer
months that expanded their knowledge about seeking
Mino-Pimatisiwin (the good life) – an indigenous
approach to wellness.
ADVOCATING FOR
RESPONSIBLE MINING
The Mining Association of Manitoba (MAMI) comprises
25 member companies and builds support for Manitoba’s
mining industry through education and collaboration.
In 2018, a Hudbay representative was elected to chair
MAMI for a two-year term, leading the association’s
efforts to promote a transparent and predictable
regulatory climate, safe and secure operations,
environmentally and socially sustainable industry
practices, and trusting stakeholder partnerships that
provide mutual benefits for all. During the year, we also
met with members of the Manitoba government to
discuss Hudbay’s plans, opportunities for growth and
trade, and concerns related to permitting.
2018 PERFORMANCE
We invested $275,000 to support a wide range of
community programs. Major contributions during the
year included:
• Flin Flon Bombers – $40,910 (local junior hockey team)
• Flin Flon and District Assessment and Referral –
$144,926
• Rotary – $13,250 (sponsorship of local events – air
show, fishing derby)
• Snow Lake Family Resource Centre – $10,000
• $50,000 toward Indspire, an indigenous-led charitable
organization that invests in education for indigenous
people, including scholarships to indigenous students
from Ontario and Manitoba
A total of 94 complaints were registered in 2018, of
which 93 were union labour grievances and one was a
community grievance about rowdy contractor behaviour.
Labour grievances related to collective agreements are
managed through a different process than that used to
address community grievances.
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exploration program. It has also improved Hudbay’s
understanding of the communities’ interests, concerns,
and capacity and the areas where the Company can
collaborate with each community.
Fostering economic opportunities is a key element of
our indigenous strategy. At one of the exploration sites,
we hired a junior prospector who is a member of the
Opaskwayak Cree Nation. We met with the Pimicikamak
Cree Nation Sector Council to kick off a project to
recruit 12 new employees from the community to
work at our Lalor mine. We also engaged traditional
knowledge holders at Lalor to participate in an
environmental assessment of planned modifications.
Along with providing employment opportunities, we
work to support indigenous businesses. Recognizing
that our procurement spend with indigenous suppliers
is still modest and that we can play a role in improving
business opportunities, we hosted an economic
development workshop with indigenous communities
to provide information to community participants
about our local procurement standards and processes.
We also developed a questionnaire for existing
contractors to determine how many use indigenous
suppliers. In 2018, payments to suppliers in northern
Manitoba and northwest Saskatchewan totalled
$45.4 million, of which approximately $1,126,857 was
awarded to indigenous businesses.
We continued to address Canada’s Truth and
Reconciliation Commission’s Call to Action No. 92, which
directs corporations to play a role in reconciliation
through actions and participation in events that build
cultural awareness and mutual understanding. We
participated in National Indigenous Peoples Day,
recognizing and celebrating the unique heritage, culture
GRI 102-15 | 102-34 | 102-44 | 103-2
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STORY
FLIN FLON
CLOSURE:
TRANSPARENCY
AND RESPECT
Hudbay and the town of Flin Flon in northern Manitoba
have a shared history that goes back to Hudbay’s
founding over 90 years ago.
organization and to encourage employees to ask
questions and contribute to solutions.
In November 2018, Robert Assabgui, Hudbay’s Vice
President of the Manitoba Business Unit, sent a memo to
employees at the Flin Flon operation announcing that
the Company would be closing its 777 mine, mill and,
most likely, the Flin Flon zinc plant in 2022. There being
no anchor mine to replace 777 and sustain operations,
the closure will effectively cease mining operations in
the town of Flin Flon for the first time since mining
began in 1927.
After making the announcement, Hudbay’s business
leaders engaged with employees and union leaders
throughout the year to explore options to sustain the
Company’s presence in Flin Flon. A series of videos
featuring updates from Hudbay’s leaders, including the
CEO and the Manitoba Business Unit leader, aimed to
keep everyone informed about changes in the
Hudbay’s focus then moved to planning ahead and
minimizing the impacts to the 900 employees working in
Flin Flon.
“We will continue to exhaust all possible options to
extend operations in Flin Flon, which we have been able
to achieve in the past,” said Alan Hair. “Unfortunately, to
date we have not been successful. We know this creates
uncertainty for our employees and their families, and
we are determined to be transparent in our plans and
communicate often – and with as much advance notice
as possible – to reduce impacts on our people and
the community.”
The Company is working on a plan that includes offering
Flin Flon workers employment opportunities in Snow
Lake and helping the community of Flin Flon successfully
manage the transition. In a January 2019 followup video
GRI 103-2
to employees, Hudbay leaders committed to work
collaboratively with the unions on putting a plan in place
by mid-2019 so that employees and their families would
have greater clarity on what it means for them.
The Flin Flon community helped shape Hudbay’s values
of dignity and respect, caring, openness and
trustworthiness, and this will be reflected in the way we
manage the closure and continue to support Flin Flon.
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PERU
We have a multi-stakeholder approach in place for
supporting sustainable development in Chumbivilcas,
where Hudbay collaborates with other relevant
entities (e.g., governments, civil society organizations,
communities), creating shared responsibility for
development, generating further opportunities and
empowering communities through their own growth
and improvement.
Ongoing efforts to support economic diversification
include the Cullahuata Dairy Processing Plant, which is
located in the province of Chumbivilcas. In collaboration
with the local government, Hudbay built the dairy plant,
provided community members the technical training
required to efficiently run it, and worked with the national
government to co-fund the plant’s machinery and
equipment. The plant, which processes milk and produces
cheeses, yogurts and butters, provides community
members with skills development and employment
opportunities. At the 2018 Expomina Peru conference –
a mining trade show held in Lima that was attended by
more than 100,000 people – Hudbay was recognized for
its role in constructing and managing the plant.
Through an alliance with Canada’s Harmony Organic (a
company that produces organic milk and dairy products),
we are supporting community leaders around Constancia
on an internship program for the communities’
agricultural facilities. In 2018, we launched an Agricultural
Development Program (PDA) with Wheaton Precious
Metals, to promote agricultural entrepreneurships
in Chumbivilcas.
Since acquiring Constancia in Peru in 2011, we have
entered into more than 90 agreements with different
local communities and governments, demonstrating the
effectiveness of our approach to ongoing, transparent,
responsive and frequent engagement.
REACHING LONG-TERM, MUTUALLY
BENEFICIAL AGREEMENTS
As we grow our land position in Peru, we are applying this
proven, successful community engagement approach
beyond the communities around Constancia. In 2017, we
initiated negotiations to acquire the surface rights related
to the Pampacancha satellite deposit, which is within
trucking distance to Constancia, with the communities of
interest. While a resolution to the negotiations is taking
longer than expected, we are willing to take the time
to do the right thing and to ensure that any agreement
GRI 102-15 | 102-34 | 102-44 | 103-2 | 203-1
continues to strengthen our relationships with local
stakeholders and supports our longer-term exploration
plans. This is the same approach we used to reach an
agreement with one of the four communities of interest
to allow us to conduct exploration on the highly
prospective Kusiorcco and Quehuincha Norte targets
that we acquired in early 2018.
BUILDING AND DIVERSIFYING
LOCAL ECONOMIES
One of the goals of Hudbay’s social programs is to work
as a valued partner with members of Constancia’s
neighbouring communities to help them improve and
develop their communities in areas that they
themselves prioritize.
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In partnership with Global Indigenous Development
Trust, we developed the North-South Exchange Program.
Each year, people from the communities and districts
surrounding Constancia travel to Canada to seek
partnerships for economic empowerment and to learn
from community, municipality and business leaders
about how mining, sustainable development and thriving
communities can coexist.
Through a memorandum of understanding between
Northern College Institute (in Northern Ontario) and
technical institutes from Chumbivilcas to provide
training, in 2018 eight members from the communities
near Constancia travelled to Northern College and
participated in classes, attended presentations from
guest speakers and toured local businesses.
Our Technical Assistance Office (TAO) engages with
different levels of government and seeks out
development projects that can be implemented as
public-private partnerships in Chumbivilcas. Our TAO
acts as an advocate for local municipalities, helping
them complete legal and technical requirements to
qualify for public and/or private funding of public
investment projects.
2018 PERFORMANCE
Our total payments to local suppliers amounted to
$8.9 million, and we invested more than $7.9 million to
support a wide range of community programs. Notable
contributions and efforts during the year included:
• In response to a massive landslide in March that
impacted more than 100 families as well as health
and water resources in the community of Lut’o Kututo
near Constancia, we worked with authorities to
establish a mobile health clinic for the community.
We also provided food, water, blankets and medical
supplies in protected waterproof tents, and our
employees helped distribute aid to those in need.
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the complaints, and has also reinforced to personnel the
importance of ensuring all commitments are in writing.
In 2018, residents of the Livitaca district threatened to
block a main road to bring attention to their social and
environmental concerns, including a request for the
district to be included in Constancia’s direct area of
influence. Hudbay established a dialogue table with
representatives of the district and government entities,
and the parties successfully reached an agreement.
During the process, Hudbay applied the Voluntary
Principles on Security and Human Rights.
• Infrastructure improvements in the Chilloroya
community included construction and repairs for the
municipality palace, roads, pathways and school fences.
• Under our Agricultural Development Program with
Wheaton Precious Metals, we provided nine
agricultural tractors to the community.
• We directed contributions toward community
programs to reduce the youth labour gap through
activities such as pre-university schools.
There were a total of 14 grievances registered in 2018.
Of the total, 11 were categorized as commercial matters
related to the operation’s rental of vehicles from the
communities, and the complaints were associated with
vehicle damage and non-payment from a contractor.
Hudbay is reviewing legal options to support the
complaints against the contractor. The other three
complaints were related to a claim of non-compliance
with a verbal social commitment. The site is investigating
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ARIZONA
Our Rosemont copper project is expected to be the
third-largest copper producer in the US, contributing
significantly to the local economy through hundreds of
jobs, tax payments and support for community programs.
With the final permit still outstanding during 2018, we
focused on keeping stakeholders informed of where we
were in the process and being accessible to them and
the entire community.
Located near Tucson, a large metropolitan city of more
than 1 million people and an area that has experienced
strong population and economic growth in recent years,
the project’s close proximity to a large pool of skilled
workers, leading universities and research institutions
provides benefits as well as challenges, such as
numerous stakeholder groups with diverse, and at times
conflicting, interests.
CONTINUING APPROACH TO
STAKEHOLDER ENGAGEMENT
In 2017, we received the US Forest Service’s Final Record
of Decision (ROD), and on March 8, 2019, we received
the Section 404 Water Permit from the US Army Corps
of Engineers (USACE).
While the environmental impact statement process
closed in 2013 and the last steps took longer than
expected, we respect the permitting agencies’ diligence
in ensuring the process is thorough and fair. During
2018, we continued to engage with stakeholders,
including the permitting agencies, to address any
concerns and questions about our plans to build a
state-of-the-art mine. We also engaged with the relevant
permitting agencies, providing them with the
information needed to successfully defend lawsuits
related to the project’s permits.
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Our stakeholder engagement plan considers the wide
range of stakeholders and their interests, including the
Native American tribes nearest to the planned operation.
Although the Rosemont project would not directly or
indirectly impact tribal lands, the Tohono O’odham
Nation maintains cultural, spiritual, social and physical
ties to the area and is considered the lead tribal entity
with regard to activities and projects associated with the
Santa Rita Mountains. We also recognize other tribes
with interest in and association with the Santa Rita
Mountains. Through the permitting process that
included consultation with the tribes, the Santa Rita
Mountains have been designated as a Traditional Cultural
Property. A signed memorandum of understanding
states our commitments related to the treatment of
artifacts and other historic articles, as well as training
and reporting.
Other social commitments that we will begin to execute
against once operations commence:
• $650,000 to relocate approximately 10 miles of the
Arizona Trail
• Between $6.5 million and $7.5 million for road
infrastructure improvements on a 12-mile stretch of the
state highway leading to the project’s entrance road
• $25 million endowment trust fund, managed by a
Board of Trustees, to fund priority community projects
including recreation, cultural, and environmental
conservation projects
• $500,000 in annual community donations per year
(following the start of operations) to support
community giving programs
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2018 PERFORMANCE
We continued to procure project engineering and design
services from local suppliers, spending $9.1 million with
local businesses and $4.6 million to suppliers throughout
Arizona during the year. We invested $204,000 in 2018
to support a wide range of community programs, with an
average donation of around $2,000. Notable programs
supported during the year included:
• We were a bronze sponsor of United Way of Tucson’s
Annual Days of Caring event, which brings together
thousands of volunteers – many of whom were
Hudbay employees – to participate in one of more
than 100 community improvement projects.
• Through our school grants program, which awards
between $500 and $5,000 to local public schools, we
awarded 12 grants totalling nearly $25,000, including
a $1,790 grant to the Catalina Foothills High
School’s astronomy department.
• We contributed $5,000 to El Tour de Tucson, one of
the community’s signature events, which attracts
nearly 10,000 cyclists, of all ages and abilities, from
across the country. The event is a fundraiser that
benefits various charities and causes. Hudbay
employees also volunteered to manage an aid station
that supported riders with refreshments and snacks.
• We contributed $8,500 to the Santa Cruz County Fair
and Rodeo Association in Sonoita, Arizona, a small
community near Rosemont. The county fair, rodeo and
related events are significant to the community and to
that part of Southern Arizona. Our support includes
being the exclusive “Junior Rodeo Sponsor” of the
Memorial Day Rodeo, which is in its 103rd year.
No complaints were formally registered through our
grievance system in 2018. However, three tribes filed a
lawsuit to challenge the Final Record of Decision from
the US Forest Service. That litigation is still in the courts.
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TOTAL GREENHOUSE GAS EMISSIONS
(kilotonnes of CO2-equivalent and intensity)
Indirect
Direct
Intensity
MBU PBU ABU
MBU PBU ABU MBU PBU ABU MBU PBU ABU MBU PBU ABU
MBU PBU ABU
MBU PBU ABU
2015
2016
2017
2018
DIRECT ENERGY CONSUMPTION BY
PRIMARY ENERGY SOURCE
(terajoules)
Propane: 31% (793 TJ)
Diesel: 69% (1,778 TJ)
ENVIRONMENT
Valuing the dignity of people, showing respect and care, being open and earning trust mean we must develop the
mineral resources our society needs in a manner that protects the environment, responsibly managing and mitigating
environmental risks.
Zero significant spills
Received Environment
Canada’s Award of
Merit for Flin Flon
weather station
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STORY
LANDSCAPE-SCALE PROJECT
RESTORES HISTORICAL
FLOODPLAIN
The Sonoita Creek Ranch (SCR) restoration project –
the cornerstone of the water mitigation package for
Hudbay’s Rosemont copper project in Arizona – provides
a rare opportunity for landscape-scale restoration of a
large ephemeral stream system.
The nearly 1,600-acre Sonoita Creek Ranch in the Santa
Rita Mountains was used decades ago for farming and
ranching. Under the project, we are working to
completely restore the Sonoita Creek and its historic
floodplain. Significant parts of the creek had been
artificially channelized since before 1880 for agricultural
purposes, cutting off tributary drainages from the
Sonoita Creek mainstem. The restoration project involves
re-establishing a channel of Sonoita Creek to the historic
floodplain, revegetating within the floodplain,
rehabilitating the existing channel, and restoring
naturally tributary drainages to the creek’s mainstem.
The project is expected to return the Sonoita Creek
floodplain to a better functioning ephemeral riparian
system. In addition, the two existing ponds on the
ranch will be renovated to support the recovery of
federally listed aquatic species. We will construct
channels to carry overflows from the ponds to the
Sonoita Creek floodplain.
To prevent impacts from domestic livestock, cattle
grazing will not be permitted on the ranch. A wildlife-
friendly barrier will be installed that provides access to
the ranch and will direct wildlife to a culvert crossing to
reduce the risk of collisions with vehicles.
In 2018, our Constancia operation in Peru recycled
2,815 kilograms of plastic bottles and donated them to
the award-winning “Ponchila” project. The project, which
was developed by Agua San Luis (owned by Coca-Cola),
Pacifico Seguros and Cencosud in 2016, turns used
plastic bottles into ponchilas – a combination backpack
and built-in poncho. The ponchilas are given to children
who live in the rural Andes, where the school dropout
rate is exacerbated by extreme temperatures and the
long distances children travel to get to school.
Each ponchila is made out of 80 recycled plastic bottles,
and Hudbay’s donation was used to make 1,161 ponchilas.
In addition to Hudbay’s involvement, Peru’s Ministry of
Environment joined the campaign in 2018 to promote
innovative ways to turn waste into added value.
Cencosud, a supermarket chain and one of the founding
project partners, also found that 40% of its customers
began recycling plastic for the first time because of
the campaign.
STORY
TURNING PLASTIC WASTE
INTO PONCHILAS
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OUR APPROACH
Our Environmental Health and Safety Policy states our
commitment to effectively manage our environmental
risks, apply best practices to reduce our environmental
footprint, and contribute to sustainability and biodiversity.
At our operations and exploration sites, we comply with
all the laws and regulations in each jurisdiction where we
operate, and our operating sites are required to maintain
(or achieve within two years of commencing production)
an environmental management system that is certified
to the ISO 14001 international standard.
As members of the Mining Association of Canada (MAC),
we apply the Towards Sustainable Mining (TSM)
environmental protocols and frameworks at our
operations in Canada and voluntarily do so at
operations outside of Canada. We annually assess our
operations’ performance against the protocols. New or
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recently acquired operations are required to achieve a
level A or higher (on a five-point scale, from level C to
AAA) for all protocols within two years of reaching
commercial production or beginning operations under
Hudbay’s control.
services. Site-specific biodiversity and ecosystem services
management plans must apply the following four
sequential key steps of the mitigation hierarchy:
1. Avoid impacts by locating facilities and infrastructure
away from natural and critical habitats.
LAND AND BIODIVERSITY
We recognize that mining activities can impact biological
diversity, and that our ability to operate and gain trust
with stakeholders requires that we develop and execute
plans that maintain healthy ecosystems.
Our Biodiversity Conservation Standard requires each
site to identify environmental conditions – such as
threatened and endangered species, protected areas
and critical habitat – and the potential impacts Hudbay’s
activities may have on biodiversity and ecosystem
2. Minimize impacts through the use of appropriate
management systems, mine designs and operating
plans that limit land disturbance throughout the
mine life.
3. Restore ecosystems by progressively rehabilitating
affected areas during operations and at closure with
a goal of mitigating the impact over time through
preservation or maintenance.
4. Offset unavoidable residual impacts through
programs to compensate for biodiversity losses and
by enhancing ecosystems in nearby areas.
Our standard aligns with, and supports our
implementation of, the TSM Biodiversity Conservation
Management Framework and protocol, and the IFC
Ecosystem Service Performance Standard. Included in
the framework are commitments to contribute positively
to biodiversity conservation throughout the mine
lifecycle, to engage with communities of interest about
biodiversity policies and practices, and to not explore or
mine in World Heritage sites.
Through monitoring programs, we track the
effectiveness of our management plans and
continuously improve our performance.
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ENERGY USE AND GREENHOUSE GAS
In alignment with the TSM Energy Use and GHG
Emissions Management protocol, we have processes and
management systems in place to manage our energy use
and GHG emissions. We annually report our performance
in the TSM Progress Report and in this report. We also
report our global GHG emissions data and performance
to CDP (formerly the Carbon Disclosure Project).
Because we have variability in our operational inputs
(such as mining deeper or further and changes in ore
composition), it is very difficult to establish a “baseline”
of energy efficiency. In 2018, we set a target to establish
guidance and a process for tracking our eco-efficiency
performance that take these complexities into
consideration. As part of the annual budgeting process,
we asked each business unit to analyze areas of eco-
efficiency – energy use, GHG intensity of our energy
supply, water, mineral waste and land disturbed. The
business units identified key drivers of consumption as
well as initiatives to improve the performance across
the areas. These analyses will be used to identify
opportunities to incorporate eco-efficiency
considerations into our capital approval process.
Compared to the prior year, our direct energy
consumption decreased 2.9%, and indirect energy
consumption increased by the same amount. Our energy
intensity increased 9.0%. Our total GHG emissions
increased 5.7%, and GHG intensity increased 13.3%, the
latter largely due to lower production.
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AIR
WATER
We do not have any major point source air emissions
(i.e., stack emissions or releases through a confined air
stream). Our primary air emissions are forms of
particulate matter (such as dust and fuel emissions),
generated by activities including blasting, excavating
ore and vehicles travelling on unpaved roads.
To ensure the air quality on and near our sites is safe
for people and the environment, we implement dust
management plans, conduct monitoring, and report our
air emissions to ensure full compliance with air quality
laws and regulations in the countries where we operate.
Our total particulate emissions decreased 12.0%
compared to 2017, largely due to the average trips per
day of trucks hauling ore declining in Manitoba after the
closure of Reed in mid-2018.
Water is fundamental for healthy communities and
ecosystems. It is also essential to our operations. Mindful
of both imperatives, we strive to continuously improve
our water management approach, apply best practices
and reduce our impact on water resources.
Our site-specific water management plans address the
unique water needs and challenges at each operation
and assess water quality, quantity and availability as well
as the needs of local communities. These plans are
developed during the feasibility stage as part of a site’s
environmental impact studies and are constantly reviewed
and updated to ensure water risks and considerations are
assessed throughout the mine lifecycle. Because our
current operations are not located in any water-stressed
areas, our operating sites focus their water management
approach on water discharge quality.
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In 2018, MAC enhanced the TSM Water Stewardship
Policy Framework by incorporating the framework into
a new Water Stewardship protocol that includes four
performance indicators – water governance, operational
water management, watershed-scale planning, and
water reporting and performance indicators. As a
member of MAC, we will implement the updated
protocol over the next several years and publicly report
against the protocol beginning in 2021.
Since 2010, we have disclosed our water management
performance in CDP’s annual Global Water Report.
In 2018, the total amount of water withdrawn remained
flat (increasing only 0.29%) and water discharged
decreased 10% compared to 2017. The amount of
water our operations discharge can be impacted by
precipitation. Total water recycled or reused was
approximately 270% of our total water use.
WASTE AND TAILINGS
CLOSURE AND RECLAMATION
We believe successful mine closure begins during the
design phase of a project’s development and continues
throughout the mine’s lifecycle.
In alignment with TSM’s Mine Closure Framework, our
closure plans include consultation and engagement with
stakeholders – in particular, the communities closest to
our mines – to collaborate on closure and reclamation
objectives and work together on long-term economic
development strategies and plans that mitigate the
environmental, social and economic impacts of closure.
We rehabilitate the former mine site to an agreed-upon
beneficial post-mining use that is as close as possible to
its pre-use condition.
Our closure plans include identifying opportunities to
conduct progressive rehabilitation once the areas are no
longer needed for mining. Post-closure activities include
maintenance and monitoring to ensure closure
objectives are progressing successfully as intended.
Mining and ore processing activities produce waste
byproducts including waste rock (overburden that has
no economic value) and tailings (the material that
remains after the minerals have been extracted from
the crushed ore).
All Hudbay operations have plans in place to reduce,
reuse, recycle and responsibly dispose of hazardous
and non-hazardous waste, with a particular focus on
managing waste rock and tailings (a more detailed
discussion on the latter is included in the Tailings
Stewardship section of this report).
Sites must manage waste rock in accordance with
environmental regulations and industry standards and
in a manner that minimizes the potential for acid rock
drainage (ARD), which is caused by a chemical reaction
when certain minerals in some rock are exposed to air
and water. Waste rock and tailings may be classified
as potentially acid generating (PAG). To minimize and
mitigate the potential impact of PAG-classified
material, wherever possible we reuse or dispose of
PAG material in contained areas that are engineered
to prevent acidic runoff.
During the year, we generated 20% less overburden
waste, 12% more waste rock and 6% more tailings
compared to the previous year. The amount of waste
produced varies depending on the stage of the mine
lifecycle (i.e., more overburden when developing mines
or near the end of the mine life).
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MANITOBA
WORKING TO MINIMIZE
ENVIRONMENTAL IMPACTS
The Manitoba Business Unit’s total water consumption
increased by 18.9% compared to 2017. Water
consumption intensity increased by 24.5%.
The electricity used to run our processing plants is
primarily renewable hydroelectricity sourced from
Manitoba Hydro, which keeps our greenhouse gas (GHG)
emissions and intensity relatively low. We do use
propane for heating and diesel to run the equipment
that extracts and transports ore. Lower grades at Lalor
and the 777 mines impact our energy consumption due
to the need to mine deeper, haul material farther, and
mill more material.
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While we are evaluating opportunities to offset these
higher energy requirements – such as working to eliminate
the use of some or all of the concentrate thaw sheds – our
overall energy usage and energy intensity increased by
1.4% and 9.7%, respectively, compared to 2017.
consumption, reduce handling costs and costs to
produce dam construction materials, and reduce risks
associated with waste. The business unit also plans to
update its closure plan in 2019 and will identify initiatives
to improve the quality of restored land and habitats.
IDENTIFYING OPPORTUNITIES FOR
ECO-EFFICIENCIES
RETURNING TO PRE-MINING
CONDITIONS
Given the expected lower grades at 777 and Lalor, the
business unit analyzed areas that relate to eco-efficiency –
energy and ensuing GHG emissions, water, mineral waste
and land disturbed – and identified opportunities to
improve its performance. These efforts include
maximizing production throughput efficiencies,
optimizing heating and ventilation during winter
months, and improving haul routes to reduce energy
Even before the last ore was mined in mid-2018 at our
Reed operation, work had begun to close and restore the
site to a state where it is indistinguishable from other
public-use areas in the park. By the end of the year, all the
buildings had been removed and any voids and entrances –
including the mine portal – had been filled and secured
with waste rock taken out during operations. Soil
containing existing organic matter that had been set aside
during construction was used to contour and replicate
the original topography. In 2019, we will conduct
environmental monitoring in consultation with Manitoba
Sustainable Development to ensure all environmental
indicators have been met. The best practices employed to
achieve the successful closure of Reed are featured in the
story “Reed Mine: A Culture of Stewardship from
Construction to Closure”.
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PERU
MAINTAINING STRONG
ENVIRONMENTAL PERFORMANCE
CONSERVING AND PROTECTING
BIODIVERSITY
• We continued a breeding and relocation program for
two threatened animal species: an endemic reptile and
an aquatic frog.
The biodiversity management plan for Constancia aims for
no net loss of biodiversity as a result of mining activities.
We achieved all plan objectives in 2018, most notably:
• The closure and reclamation of a tunnel that was near
an area disturbed during construction, called DM7,
included revegetation using native grasses and trees.
• We progressed the management plan for the
• Wildlife-crossing warning signs were erected across
Cochapampa bog, a wetland that serves as a source of
water and cattle feed for the communities of Chilloroya
and Uchucarco. Actions carried out during the year to
support the goal of maximizing the benefits of the land
through sustainable management practices include
conducting studies on animal load capacity, soil
conditions and water sources; holding workshops on
animal health and good livestock management
practices; and completing a topographic survey and
plotting of users inside and outside the bog.
the mine site.
• A commission of biologists, environmental engineering
professors and students from Universidad Andina del
Cusco, and high school teachers and students from
Chilloroya were given guided tours of the mine.
• To support our biodiversity management efforts,
we implemented an on-demand satellite imagery
service and remote sensing drone technology with
multispectral sensors. These will be used to enhance
our land management plan.
The Peru Business Unit set a 2018 target to maintain its
current energy- and water-consumption-to-occupancy
ratio at the accommodation camp. While the target was
not met, this was largely due to the fact that there were
fewer people at the camp during the year, while the
number and size of the facilities remained unchanged.
With an additional 400 workers expected in 2019, the site
will monitor opportunities to improve energy use and
water consumption at the camp. The site also plans to
install LED lights throughout the processing plant in 2019.
Total water consumption decreased by 13.3%, and water
consumption intensity decreased by 12.6% compared to
the prior year. The Constancia operation’s surface and
groundwater consumption was 30% and 72% less,
respectively, than the amount authorized by the licences
that govern the site’s water use. Through our water
quality monitoring program, which assesses impacts our
activities may have on water sources, we implemented
additional treatment in the accommodation camp’s
collection system to address exceedances of sulphates.
During the year, no air quality parameters were
exceeded. As part of a plan to control particulate matter
air emissions, the site began using a dust suppressant
on a 10-kilometre stretch of road. Hudbay was the first
mining company in southern Peru to use the dust
suppressant, and due to its success, many other mining
companies in the area have begun to use it as well.
As part of its solid waste management plan, Constancia
donated wood and used pipes and geomembrane
materials to the communities for their reuse; donated
plastic bottles to a campaign that creates “ponchilas”
(a backpack and poncho combination) for children; and
held a “Hudbay Recycles” contest to encourage employees
and contractors to properly segregate solid waste.
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IDENTIFYING OPPORTUNITIES
FOR ECO-EFFICIENCIES
As part of an exercise in 2018 to analyze opportunities
to improve eco-efficiency, the business unit identified
initiatives across all related areas – energy and ensuing
GHG emissions, water, mineral waste and land disturbed.
These efforts include adjusting the primary crusher and
implementing improvements to the blasting process to
improve energy efficiency; including thresholds in the
water balance related to precipitation and withdrawals;
conducting geochemical studies and improving seepage
water control to improve recycling and reduce risks
related to waste; and enhancing land and habitat
restoration through a forestation program.
Our overall energy usage in Peru increased by 9.9%, and
our energy intensity increased by 0.05% compared to the
previous year.
Constancia maintained its level A rating across all
indicators in TSM’s Energy Use and GHG Emissions
Management protocol.
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COMPREHENSIVE MITIGATION AND
MONITORING
for the western yellow-billed cuckoo and the
southwestern willow flycatcher, and ground-based
sky brightness monitoring.
The story “Rosemont Project: Planning for the
Future” details the project’s approach to developing
and operating a mine using best practices and new
approaches that will raise the standard of mining in
Arizona and other jurisdictions around the world.
We will implement more than 100 monitoring and
mitigation measures to address potential impacts.
Standard mitigation measures include managing
potential impacts to water, soil, air and biodiversity.
The landscape-scale restoration project of a large
ephemeral stream system featured in the story
“Landscape-Scale Project Restores Historical
Floodplain” is an example of a program included in our
comprehensive mitigation package. We will also fund
specialized programs, including camera studies for
large predatory species, management and removal of
harmful non-native aquatic species, habitat improvement
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ARIZONA
Our Rosemont project in Arizona will be a modern mine
that showcases state-of-the-art techniques and
sustainable environmental practices. In March 2019, we
received from the US Army Corps of Engineers the last
key permit needed to start developing the project.
DOING OUR PART TO MANAGE
WATER IN THE DESERT
Under Rosemont’s mine plan, we will employ
technologies and practices that will allow us to use half
as much water as similar copper operations in Arizona.
In addition to using an alternative method for managing
our tailings, called dry-stack or filtered tailings, which
requires half the water for twice the production, we plan
to replace all groundwater used for mining activities by
replenishing the Green Valley community’s groundwater
aquifer with water from the Colorado River. In 2018, we
began construction on the project, which includes an
eight-mile-long pipeline that will transport water from
the Central Arizona Project (CAP) terminus to the Green
Valley area. The pipeline will allow the Green Valley
community’s water utility to use its CAP allocation and
offset its groundwater withdrawals. It will also allow
Rosemont to recharge water near its production wells.
While operations have not yet commenced, as of the end
of 2018 we had stored the equivalent of our water
requirements for approximately nine years in the aquifer.
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BASIS OF REPORTING
All financial information is presented in US
dollars except where otherwise indicated.
All operating data is reported using the
metric system. Some metrics are reported
on both an absolute basis and an intensity
basis against kilotonnes of metal
processed. Safety data frequency rates are
measured per 200,000 hours worked.
CSR
PERFORMANCE
DATA MEASUREMENT TECHNIQUES
Data is measured or estimated, and operations are asked
to explain significant deviations in year-over-year trends.
The performance data is reported at a mix of operational
and corporate levels. Data is checked and approved at the
site level, and reviewed for consistency by the corporate
data collection team.
We provide safety and environmental incident definitions
so that all operations report incidents consistently. We
calculate greenhouse gas (GHG) emissions using
published factors for emissions.
GHG numbers related to purchased electricity. We
generated electricity at one of our sites (Reed), and this
energy is reflected in fuel consumption, while GHG
numbers are calculated based on conversion factors.
Data for the indicators is collected and compiled using
information submitted on a standard template by each
site. We provide instruction and criteria for GRI G4 and
Towards Sustainable Mining (TSM), and we supply a
GHG emissions worksheet developed by the Mining
Association of Canada (MAC).
Most of the performance data for water and energy is
metered. We purchase most of our electricity from local
grids. Utility grid statistics are therefore used to compile
Hudbay 2018 Annual and CSR Report
| CSR Performance
73
KEY PERFORMANCE DATA
CEO Message
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Business and
Financial Review
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Our People
Social Impact
Environment
CSR Performance
Economic
(in $000s, unless otherwise stated)
Direct economic value
generated and distributed
Profit (loss) before tax
Revenues
Operating costs
Canada
US
Peru
Chile
Colombia
Total
Employee wages and benefits
Canada
US
Peru
Chile
Colombia
Total
Payments to government
Taxes paid
Canada
US
Peru
Chile
Colombia
Total
GRI 201-1 | 102-8
2018
2017
2016
2015
2018
2017
2016
2015
$
$
170.8
1,472.3
$
$
198.7
1,362.6
$
$
5.6
1,128.7
$
$
331.4
923.1
458.5
439.0
358.9
1.8
0.5
0.6
374.7
297.7
298.5
5.8
0.0
3.9
0.0
2.2
0.0
408.5
5.7
186.0
0.5
0.4
$
840.8
$
741.1
$
660.2
$
601.1
161.3
174.0
147.2
157.1
6.2
47.3
0.0
0.0
5.7
41.8
0.0
0.0
7.8
27.5
2.2
0.0
9.3
22.4
0.0
0.2
Municipal taxes and grants
Canada
US
Peru
Chile
Colombia
Total
Penalties and interest paid
Canada
US
Peru
Chile
Colombia
Total
Payments to providers of capital
Dividends paid
Interest payments made to
$
214.8
$
221.5
$
177.5
$
189.0
providers of loans
$
$
$
5.7
0.0
2.9
0.0
0.0
6.9
0.1
3.5
0.0
0.0
6.8
0.0
0.0
0.0
0.0
$
8.6
$
10.5
$
6.8
$
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.4
0.0
0.0
0.0
0.0
0.3
0.0
0.0
0.0
$
0.4
$
0.3
$
4.0
$
3.7
$
3.6
$
3.6
74.8
$
52.7
$
126.5
$
108.6
9.6
0.2
47.6
0.0
0.0
9.1
0.2
23.5
0.0
0.0
6.6
0.0
38.9
0.0
0.0
$
57.4
$
32.8
$
45.5
$
34.1
Financing fees paid
Canada
Peru
Total
6.1
0.0
28.0
Other interest paid
3.6
17.0
6.6
20.0
49.4
20.1
$
20.6
$
26.6
$
69.5
$
0.0
0.0
Canada
Peru
Total
0.0
0.0
0.0
0.0
0.0
0.0
$
0.0
$
0.0
$
0.0
$
6.7
0.1
0.0
0.0
0.0
6.8
0.1
0.0
0.0
0.0
0.0
0.1
1.3
1.2
2.5
0.0
0.0
0.0
CEO Message
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Hudbay 2018 Annual and CSR Report
| CSR Performance
74
Total full-time employees
2,179
Economic (cont’d)
(in $000s, unless otherwise stated)
Capital expenditures –
2018
2017
2016
2015
cash flow basis
$
190.9
$
249.8
$
192.8
$
490.6
Payments – local communities
for land use
Canada
US
Peru
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1,062.0
2,149.0
1,829.3
579.5
Employees
Total workforce
Full-time employees
MBU
Corporate
Arizona
Peru
Chile
Total land use payments
$
1,062.0
$
2,149.0
$
1,829.3
$
579.5
British Columbia
Public benefit
Community investment and
charitable donations1
Canada
US
Peru
Chile
Colombia
Total community investments
and donations
Resettlement investment (Peru)
Production (contained metal
in concentrate)
Copper (000 tonnes)
Zinc (000 tonnes)
Gold (000 ounces)
Silver (000 ounces)
Metal production
Zinc (000 tonnes)
395.6
204.5
287.5
178.7
345.1
147.1
307.1
63.5
4,499.7
5,941.2
3,738.3
2,435.7
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Employment
Part-time employees
MBU
Corporate
Arizona
Peru
Chile
$
$
5,099.8
130.0
$
$
6,407.4
98.0
$
$
4,230.5
1,081.5
$
$
2,806.3
British Columbia
957.5
Total part-time employees
154.6
115.6
119.9
159.2
135.2
108.6
174.5
110.6
114.3
147.3
102.9
100.2
3,954.5
3,487.3
3,755.9
2,791.5
102.1
107.9
102.6
101.9
Contract (term) employees
MBU
Corporate
Arizona
Peru
Chile
British Columbia
Total contract employees
1 Political donations are included in this total; however, in accordance with Hudbay policy, political donations
were $0.
GRI 102-8
2018
2017
2016
2015
1,382
1,332
1,319
1,399
74
33
6902
0
0
70
35
304
0
N/ap
1,741
67
40
230
0
N/ap
1,656
13
20
10
0
2
0
0
0
15
34
4
1
1651
1
6
211
0
4
0
0
N/ap
24
19
2
1
444
50
N/ap
516
0
2
0
0
N/ap
12
13
1
0
363
8
N/ap
385
68
50
183
0
N/ap
1,700
2
0
2
0
0
N/ap
4
7
5
0
187
1
N/ap
200
2 The significant increase in full-time employment and decrease in contract employees in Peru is in large part due
to hiring our contract employees full time.
Hudbay 2018 Annual and CSR Report
| CSR Performance
75
2018
2017
2016
2015
2018
2017
2016
2015
CEO Message
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Business and
Financial Review
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Social Impact
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CSR Performance
Employees (cont’d)
Co-op and summer students hired
MBU
Corporate
Arizona
Peru
Chile
British Columbia
Total co-op/summer students
Employees represented by
collective bargaining
agreements
Percentage of employees
represented by trade unions
(includes all full-time, part-time
27
3
3
12
0
0
45
26
3
1
12
0
N/ap
42
21
2
0
8
0
N/ap
31
40
3
2
12
0
N/ap
57
Employee turnover (includes
all full-time employees and
Peru contract employees)
MBU
Corporate
Arizona
Peru
Chile
British Columbia
Total
1,658
1,583
1,121
1,053
Age distribution
<30
30–50
and Peru contract employees)
70.3%
71.7%
67.7%
61.9%
>50
Operational changes
Minimum number of weeks
provided before operational
changes (MBU only)
Negotiated into collective
agreements (MBU only)
Number of strikes or lockouts
exceeding one week
MBU
Corporate
Arizona
Peru
Chile
British Columbia
Total
GRI 102-8 | 102-41 | 401-1 | 401-2
2
Yes
0
N/ap
N/ap
0
N/ap
N/ap
0
2
Yes
0
N/ap
N/ap
0
N/ap
N/av
0
2
Yes
0
N/ap
N/ap
0
N/ap
N/av
0
Gender
Male
Female
Voluntary turnover rate
(Hudbay total)
Involuntary turnover rate
(Hudbay total)
New employee hires
MBU
Corporate
Arizona
Peru
Chile
British Columbia
Total
2
Yes
1
N/ap
N/ap
N/ap
N/ap
N/av
1
189
7
10
108
0
0
314
25.2%
43.6%
31.2%
76.1%
23.9%
192
8
8
128
0
N/ap
336
20.2%
44.9%
34.8%
79.2%
20.8%
201
206
11
16
64
0
N/ap
292
20.2%
39.0%
40.8%
80.1%
19.9%
5
9
32
0
N/ap
252
23.4%
40.5%
36.1%
75.4%
24.6%
10.1%
12.8%
13.0%
11.4%
4.4%
6.5%
4.6%
3.6%
222
15
3
227
0
0
467
220
13
6
238
0
N/ap
477
141
3
3
280
0
N/ap
427
221
12
23
160
0
N/ap
416
Hudbay 2018 Annual and CSR Report
| CSR Performance
76
CEO Message
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Business and
Financial Review
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Social Impact
Environment
CSR Performance
Employees (cont’d)
Age distribution
<30
30–50
>50
Gender
Male
Female
Net number of full-time
employees added
(decreased)
Canada
US
Peru
Colombia
Chile
British Columbia
Total
Senior management from
local community
Number of contractor full-time
equivalent staff
Manitoba
Peru
Arizona
Chile
British Columbia
GRI 102-8 | 404-3 | 405-1
2018
2017
2016
2015
2018
2017
2016
2015
35.1%
59.1%
11.6%
81.2%
18.8%
54
(2)
386
N/ap
N/ap
N/ap
438
38.8%
52.4%
8.8%
80.7%
19.3%
16
(5)
74
N/ap
74
N/ap
159
32.8%
54.6%
12.6%
83.4%
16.6%
(81)
(10)
47
0
0
N/ap
(44)
40.6%
47.4%
12.0%
79.3%
20.7%
15
8
9
0
0
N/ap
32
6
5
9
2
Person-hours of work
(including contractors)
North America
South America
3,701,855
3,232,379
3,073,646
3,245,882
5,992,125
7,867,939
7,589,501
9,907,705
Total person-hours
9,693,980
11,100,318
10,663,147
13,153,587
Employees receiving regular
performance and career
development reviews
(includes all full-time
employees)
Percentage reviewed
46%
40%
20%
41%
Hudbay total workforce age
distribution (includes all
full-time employees)
<30
30–50
>50
Composition of governance
bodies and breakdown of
employees
Workforce diversity (includes all
full-time employees)
Female (Hudbay)
16.7%
62.0%
30.9%
14.6%
52.6%
33.1%
14.2%
53.0%
32.2%
13.0%
47.9%
39.6%
429
1,737
13
38
3
284
2,780
9
22
175
2,974
15
13
274
4,337
55
4
N/ap
N/ap
N/ap
MBU
Corporate
Arizona
Peru
Chile
British Columbia
213
32
15
83
N/ap
N/ap
195
33
17
76
N/ap
N/ap
189
32
17
60
N/ap
N/ap
187
32
24
28
N/ap
N/ap
CEO Message
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Hudbay 2018 Annual and CSR Report
| CSR Performance
77
Employees (cont’d)
Percentage of total workforce
that is female
Indigenous (MBU only)
Disabled (MBU only)
Visible minorities (MBU only)
Composition of executive
management and corporate
governance bodies
Board of Directors
(ratio male to female)
Age distribution
<30
30–50
>50
Executive management
(ratio male to female)1
Age distribution
<30
30–50
>50
Ratio of annual compensation
of highest paid individual to
mean total compensation
(includes all full-time
employees and Peru
contract employees)
Canada (MBU, excluding
Corporate office)
Canada (including Corporate
office)
Peru
United Sates (ABU)
2018
2017
2016
2015
2018
2017
2016
2015
16%
15%
4%
6%
18%
14%
5%
6%
2.5:1
2.3:1
0%
0%
0%
0%
18%
13%
5%
6%
4:1
0%
0%
16%
13%
5%
6%
4:1
0%
0%
100%
100%
100%
100%
Workforce represented in
formal joint management–
worker Health and Safety
Committees
Percentage represented
Health and safety performance
(per 200,000 hours worked,
except where noted)
Lost time accident (LTA) frequency
Manitoba
Manitoba contractors
Peru
Peru contractors
Arizona
Arizona contractors
7:1
5:1
6.5:1
7:1
Chile
0%
30%
70%
0%
29%
71%
0%
53%
46%
0%
64%
36%
Chile contractors
Other North America (not
including MBU and ABU)
Other North America
contractors (not including
MBU and ABU)
Other South America (not
including Peru and Chile)
Other South America
contractors (not including
Peru and Chile)
5.8:1
6.8:1
4.9:1
6.5:1
Total
28.3:1
19.1:1
5.5:1
23.4:1
19.5:1
4.8:1
24.1:1
9.2:1
4.3:1
16.4:1
10.0:1
4.2:1
100%
100%
100%
100%
0.8
0.0
0.1
0.1
0.0
0.0
0.0
2.6
0.0
0.0
0.0
0.0
0.3
1.0
0.7
0.1
0.0
0.0
0.0
N/av
N/av
0.0
0.0
0.0
0.0
0.3
1.1
0.0
0.1
0.0
0.0
0.0
N/av
N/av
0.0
0.0
0.0
0.0
0.3
1.0
0.7
0.7
0.1
0.0
0.0
N/av
N/av
0.0
0.0
0.0
0.0
0.3
1 In previous years, business unit Vice Presidents had been left out of this executive management statistic. We
have corrected the data to include them in order to better align with our executive management definition.
GRI 102-8 | 102-38 | 402-1 | 403-1 | MM4
Hudbay 2018 Annual and CSR Report
| CSR Performance
78
2018
2017
2016
2015
2018
2017
2016
2015
34.2
0.0
4.3
7.5
0.0
0.0
0.0
178.7
0.0
0.0
0.0
0.0
14.3
34.4
13.9
0.5
0.0
0.0
0.0
N/av
N/av
0.0
0.0
0.0
0.0
8.4
37.3
0.0
2.0
0.6
0.0
0.0
N/av
N/av
0.0
0.0
0.0
0.0
9.3
Restricted work case (RWC)
frequency
Manitoba
Manitoba contractors
Peru
Peru contractors
Arizona
Arizona contractors
Chile
Chile contractors
35.2
14.8
22.0
3.6
0.0
0.0
N/av
N/av
North America (not including
0.0
MBU and ABU)
North America contractors
(not including MBU
and ABU)
South America
(not including Peru)
South America contractors
(not including Peru)
Total
0.0
0.0
0.0
11.4
0.4
0.7
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.2
0.7
0.7
0.0
0.0
0.0
0.0
N/av
N/av
0.0
0.0
0.0
0.0
0.2
1.1
0.5
0.0
0.0
0.0
0.0
N/av
N/av
0.0
0.0
0.0
0.0
0.3
1.8
0.0
0.2
0.0
0.0
0.0
N/av
N/av
0.0
0.0
0.0
0.0
0.4
CEO Message
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Business and
Financial Review
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Social Impact
Environment
CSR Performance
Employees (cont’d)
Lost time accident severity
(SEV)
Manitoba
Manitoba contractors
Peru
Peru contractors
Arizona
Arizona contractors
Chile
Chile contractors
North America (not including
MBU and ABU)
North America contractors
(not including MBU
and ABU)
South America
(not including Peru)
South America contractors
(not including Peru)
Total
GRI 102-8 | 403-2
Hudbay 2018 Annual and CSR Report
| CSR Performance
79
Employees (cont’d)
CEO Message
Medical aid (MA) frequency
First aid (FA) frequency
2018
2017
2016
2015
2018
2017
2016
2015
Manitoba
16.9
16.8
22.6
Our Feature Stories
Manitoba
11.4
10.9
11.8
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
Manitoba contractors
Peru
Peru contractors
Arizona
Arizona contractors
Chile
Chile contractors
North America (not including
MBU and ABU)
North America contractors
(not including MBU
and ABU)
South America
(not including Peru)
South America contractors
(not including Peru)
Total
8.3
0.0
0.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
3.8
5.4
0.3
0.1
3.4
0.0
N/av
N/av
0.0
0.0
0.0
0.0
2.8
5.5
0.0
0.2
0.0
0.0
N/av
N/av
0.0
0.0
0.0
0.0
3.0
11.0
12.3
2.3
0.2
4.9
5.3
N/av
N/av
Manitoba contractors
Peru
Peru contractors
Arizona
Arizona contractors
Chile
Chile contractors
North America (not including
0.0
MBU and ABU)
0.0
0.0
0.0
3.0
North America contractors
(not including MBU
and ABU)
South America
(not including Peru)
South America contractors
(not including Peru)
Total
Fatality (number)
Absentee rate (as a % of hours
4.7
0.9
1.0
0.0
0.0
0.0
0.0
1.4
0.0
0.0
0.0
5.5
0
2.4
0.9
0.7
0.0
10.5
N/av
N/av
0.0
0.0
0.0
0.0
4.3
0
4.4
0.9
0.4
0.0
0.0
N/av
N/av
0.0
0.0
0.0
0.0
5.7
0
22.1
6.0
4.8
0.6
17.2
5.3
N/av
N/av
0.0
0.0
0.0
0.0
5.2
0
scheduled to be worked)
N/av
N/av
N/av
N/av
Reportable occurrences
(defined as EHS incidents
required by Hudbay policy
to be reported to our Board
of Directors)
79
56
79
141
Hudbay 2018 Annual and CSR Report
| CSR Performance
80
Employees (cont’d)
Risks to the right to
collective bargaining
Corporate
Manitoba
Arizona
Peru
Chile
British Columbia
CEO Message
Our Feature Stories
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Business and
Financial Review
CSR Approach
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Social Impact
Environment
CSR Performance
2018
2017
2016
2015
Corporate
MBU
Benefits
No
No
No
No
No
No
No
No
No
No
No
N/av
No
No
No
No
N/av
N/av
No
No
No
No
N/av
N/av
Life insurance
Health care
Disability and invalidity
coverage
Parental leave
Retirement provision
Stock ownership
Other – Critical illness insurance
Other – Accidental death and
dismemberment insurance
Life insurance
Health care
Disability and invalidity
coverage
Parental leave
Retirement provision
Stock ownership
Other – Critical illness insurance
Other – Accidental death and
dismemberment insurance
Full time
Full time
Part time
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Management
only
Yes
Yes
Yes
No
No
No
No
No
No
Peru
ABU
Full time
Part time
Full time
Part time
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
N/ap
N/ap
N/ap
N/ap
N/ap
N/ap
N/ap
N/ap
Yes
Yes
Yes
Yes
Yes (401k)
Yes
No
Yes
No
No
No
No
No
No
No
No
GRI 401-2 | 403-2 | 407-1
Hudbay 2018 Annual and CSR Report
| CSR Performance
81
CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
Society
Total number of incidents
of discrimination
(and actions taken)
Land use disputes
Resettlements
Number of households (Peru only)
Number of individuals (Peru only)
Employees trained in
anti-corruption policies
Number – employees
Percentage of workforce
Percentage of Board and
management given training
Employees that
anti-corruption policies
have been communicated to
Number – management
Percentage
Number – non-management
Percentage
Governance body members
that anti-corruption policies
have been communicated to
Number
Percentage
2018
2017
2016
2015
2018
2017
2016
2015
11
12
0
0
1,064
49%
100%
564
100%
1,840
100%
10
100%
0
2
0
0
952
55%
1
3
0
0
66
4%
100%
100%
580
100%
1,649
100%
10
100%
534
100%
418
27%
10
100%
0
0
36
150
360
21%
91%
229
98%
560
100%
Governance body members
that received training on
anti-corruption
Number
Percentage
Average hours of training
(Peru and Arizona business
units only)
Males in management
Females in management
Males in non-management
Females in non-management
10
100%
10
100%
65.69
75.73
118.09
113.48
60.70
65.98
100.09
85.82
Average spend (DJSI)
$207.91
$362.28
Security practices (security
personnel training)
Hudbay security personnel
trained in human rights
policies and procedures
Number
Percentage
Contractor security personnel
trained in human rights
policies and procedures
10
100%
Number
Percentage
15
100%
135
98%
15
100%
124
98%
10
100%
6.86
9.36
9.59
14.11
N/av
14
100%
7
100%
10
100%
19.65
50.17
51.86
36.71
N/av
15
98%
175
99%
1 There was a Human Rights Commission Complaint filed alleging harassment based on gender in June 2018 that
was resolved through mediation in October 2018.
2 We did not have any specific disputes related to land use of communities or indigenous people in 2018.
However, in Arizona, three tribes filed a lawsuit to challenge the Final Record of Decision from the US Forest
Service. That litigation is still in the courts.
Value of fines or sanctions
for non-compliance with
laws and regulations
$0
$0
$0
$5,000
GRI 205-2 | 406-1 | 410-1 | 412-2 | MM6 | MM7 | MM9
Hudbay 2018 Annual and CSR Report
| CSR Performance
82
2018
2017
2016
2015
2018
2017
2016
2015
CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
Society (cont’d)
Grievances about impacts
on society
Number filed through formal
grievance mechanisms
Number addressed during
reporting period
Number resolved during
reporting period
Number filed prior to the
reporting period that
were resolved during the
reporting period
Number of other concerns
Environment
Labour and commercial
practices
Resettlement/livelihood
Human rights
Other
15
15
1
8
0
20
20
12
8
4
1041
113
0
0
42
2
1
1
32
32
12
3
1
24
1
1
4
1 Previously, we did not record union labour grievances in Manitoba; we started to in 2017.
2 More information
GRI 102-34 | 102-44 | MM6 | MM7 | MM10
67
67
65
6
4
54
2
1
6
Closure plans
Identify total number of
operations
Number of company operations
that have closure plans
Percentage of total operations
with closure plans
Number of advanced
exploration projects that have
closure plans
Percentage of advanced
exploration projects that have
closure plans
Overall financial provision
representing the present
value of future cash flows
relating to estimated closure
costs per Canadian Generally
accepted accounting
principles (in $000s)
Operation has implemented
local community
engagement, impact
assessments and
development programs in
line with the Stakeholder
Engagement Standard
Manitoba
Arizona
Peru
Chile
British Columbia
4
4
5
5
5
8
7
10
100%
100%
160%
125%
2
1
1
0
100%
100%
100%
N/ap
$202,024
$200,000
$177,296
$147,027
Yes
Yes
Yes
Yes
Yes
Partially
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Partially
Yes
Yes
No
N/ap
N/ap
N/ap
Hudbay 2018 Annual and CSR Report
| CSR Performance
83
CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
Society (cont’d)
Operation is taking place in
or adjacent to indigenous
peoples’ territories
Manitoba
Arizona
Peru
Chile
British Columbia
Artisanal mining
Corporate
Manitoba
Arizona
Peru
Chile
British Columbia
2018
2017
2016
2015
2018
2017
2016
2015
Environment
Direct energy consumption by
primary energy source
(terajoules)
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Propane
Diesel
Light oil
Gasoline
N/ap
N/ap
N/ap
Other
793
1,778
0
15
0
629
2,019
0
16
0
579
1,941
0
14
0
629
2,034
0
11
1
Total
2,586
2,664
2,533
2,675
N/ap
N/ap
No artisanal
mining
No artisanal
mining
No artisanal
mining
No artisanal
mining
Yes1
Yes2
N/ap
Yes1
Yes3
N/ap
N/ap
N/ap
N/av
Yes
No
N/ap
N/ap
N/ap
N/av
N/av
N/av
N/ap
1 In 2010, the Chilloroya community and Norsemont Peru (now Hudbay Peru SAC) signed an exploration and
artisanal mining formalization contract which functioned as an agreement to help the community in the
formalization process for its artisanal mining activity. This contract ended on June 19, 2015.
2 There is artisanal mining currently taking place adjacent to both our Trilco property and our Llahuin property.
The mining site near our Llahuin property is a larger, more industrial operation than the one near Trilco. We
have good relationships with the owners of both sites.
3 Artisanal mining is currently taking place on both our Farellon Sanchez and Fiel Rosita properties. At Farellon
Sanchez, there are at least five operations mining copper and gold veins underground, and selling ore to a
government agency. At Fiel Rosita, the La Estrella mine is operated by a local family, and sells approximately
250 tonnes of ore a month to the same government agency (Enami).
Indirect energy consumption
by primary energy source
(terajoules)
Total electricity consumed
5,820
5,652
5,262.6
4,932.0
Indirect energy sold/credits
(terajoules)
Electricity
Total indirect energy
consumed by organization
0.4
0.5
0.5
0.4
(terajoules)
5,819
5,652
5,262.1
4,936.0
Energy intensity (terajoules
per kilotonne of metal in
concentrate)
31.1
28.3
27.3
30.9
Total direct and indirect
greenhouse gas emissions
(kilotonnes of CO2-
equivalent)
Direct carbon dioxide emissions
Indirect carbon dioxide emissions
Total
GHG intensity
NOX, SOX and other significant
air emissions (in kilotonnes)
170.19
403.10
573.29
2.1
177.17
363.48
540.65
1.84
170.96
322.31
493.27
1.73
188.08
277.80
455.30
1.82
GRI MM5 | MM8
Particulate
0.54
0.62
0.44
0.16
Hudbay 2018 Annual and CSR Report
| CSR Performance
84
CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
Environment (cont’d)
Total water withdrawal
(000 cubic metres)
Surface water
Groundwater
Rainwater collected directly and
Waste water from another
organization
Municipal water supplies
2018
2017
2016
2015
2018
2017
2016
2015
13,770
4,155
11,058
2,747
10,632
3,582
11,549
Total waste (tonnes)
2,698
Overburden
258,288.0
1,302,405.2
2,053,659.9
N/av
Hazardous waste disposed of
at external facility (tonnes)
1,165.6
1,943.5
1,520.3
1,508.5
stored by the organization
6,193
10,242
7,143
7,168
Waste rock
Tailings
37,055,344.0
32,432,668.5
51,426,208.8
42,764,760.0
32,457,474.0
30,545,163.0
28,968,944.0
24,780,081.6
0
0
0
0
0
0
0
0
Number of fines or sanctions
for non-compliance
with environmental laws
Total water withdrawal
24,118
24,047
21,306
21,415
and regulations
0
0
0
0
Percentage and total volume
of water recycled and reused
Land use (hectares) – mineral
tenure (controlled)
Total volume (000 cubic metres)
65,698.20
53,474.40
56,291.74
16,944.37
Manitoba and Saskatchewan
241,809.9
121,241.4
122,639.4
137,832.4
Percentage
272.41%
222.37%
264.20%
79.12%
Yukon
0.0
21.0
583.4
21.0
5,823.4
5,823.4
21.0
21.0
241,830.9
121,845.7
261,822.9
279,028.9
7,284.0
7,284.0
7,284.0
7,284.0
7,284.0
7,284.0
263,900.0
263,900.0
68,826.0
7,284.0
7,284.0
1,531.0
99,735.7
99,735.7
5,187.0
43,669.5
Total South/Central America
363,635.7
363,635.7
74,013.0
45,200.5
Total
612,750.5
492,765.4
343,119.8
331,513.4
217
2,623
Total water discharged
(000 cubic metres)
To Flin Flon Creek/Ross Lake/
Schist Lake
To Anderson Creek/
Wekusko Lake
To Woosey Creek/Morgan Lake
Namew Lake
Herblet Lake
To ground
To Chilloroya River (Peru)
Water treated
(000 cubic metres)
Total number of significant spills
Volume (liquid) (m3)
Volume (solid) (tonnes)
15,897
13,941
14,353
10,546
Nunavut
Total Canada
Arizona
Total USA
4,594
1,106
Chile
Peru
4,384
1,670
30
5
181
1,358
9,067
1,788
30
784
297
294
8,025
2,142
30
926
247
188
23,526
26,201
25,911
19,086
0
0.0
0.0
3
286.0
120.0
9
516.5
N/av
9
382.0
N/av
GRI 303-1 | 303-3 | 306-1 | 306-3 | 306-4 | 306-5 | MM3
Hudbay 2018 Annual and CSR Report
| CSR Performance
85
Environment (cont’d)
Land use (hectares) – surface
tenure (disturbed)1
2018
2017
2016
2015
2018
2017
2016
2015
Habitats protected or
restored (hectares)
Manitoba and Saskatchewan
7,647.4
7,314.1
7,314.1
7,314.1
Protected
0.0
0.0
120.0
0.0
120.7
0.0
120.7
Restored
0.0
Partnerships exist
0
0.61
Yes
0
0
Yes
0
51.93
Yes
0
0.62
Yes
7,647.4
7,434.1
7,966.2
7,969.9
Status at close of reporting period
Monitoring
Monitoring
Monitoring
Monitoring
0.0
0.0
0.0
1,524.2
1,524.2
9,171.6
0.0
0.0
0.0
1,518.0
1,518.0
8,952.1
0.0
0.0
0.3
1,568.4
1,568.7
0.0
0.0
0.0
5,187.0
5,187.0
9,534.8
13,156.9
IUCN Red List species and
National Conservation List
species
Critically endangered
Endangered
Vulnerable
Near threatened
Least concern
2
2
1
1
3
5
25
22
89
2
2
19
12
4
3
8
12
11
6
3
8
14
9
6
CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
Yukon
Nunavut
Total Canada
Arizona
Total USA
Chile
Peru
Total South/Central America
Total
CSR Performance
Sites requiring biodiversity
management plans
Number of sites legally
requiring plans
Percentage of sites with legally
required plans in place
100%
100%
100%
100%
Number of sites with voluntary
plans in place
1
1
1
1
1 We are reassessing how we report on this topic and will be providing a fuller analysis in future years.
GRI 102-34 | 304-1 | 304-3 | 304-4 | MM1 | MM2
Hudbay 2018 Annual and CSR Report
| CSR Performance
86
2018 TARGETS AND ACHIEVEMENTS
Target
Health and safety
Achievement
Details
Improve on our current three-year average lost time
accident severity of 9.71
Partially achieved
Improve on our three-year total recordable injury
frequency average of 2.8
Partially achieved
As of December 31, 2018, our three-year average lost time accident severity was 10.5.
However, our three-year average performance at each of our Manitoba and Peru business
units actually improved (from 31.4 to 29.2 in Manitoba, and from 2.3 to 2.1 in Peru). Despite
improved performance in each location, our average corporate performance dropped
because of reduced hours worked in Peru, which reduced weighting of our high-performing
Peru operation.
As of December 31, 2018, our three-year average total recordable injury frequency was 3.7.
However, our three-year average performance at each of our Manitoba and Peru business
units actually improved (from 16.0 to 12.0 in Manitoba, and from 0.3 to 0.2 in Peru). This
discrepancy between improvement at each business unit and lower overall company
performance is for the same reason noted above.
Community
Finalize human rights risk assessment framework and
carry out trial for at least one location
Achieved
Human rights and social risk assessment framework has been created and tested to some
degree in Arizona and Peru.
CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
Environment
Establish improved corporate guidance and process for
eco-efficiency performance tracking and site-level target
setting that accounts for the complexity and variability of
mining operations and integrates consideration of business
and environmental priorities
Achieved
Eco-efficiency considerations were formally implemented within the budgeting process.
Maintain scores in the MAC TSM Tailings Management
protocol for Manitoba and Peru
Partially achieved
Pending third-party verification. Peru dropped one grade level on the Energy Use and GHG
Emissions Management protocol due to missing its target this year.
Maintain current energy and water consumption to
occupancy ratio at the accommodation camp in Peru
Not achieved
The target was 254 kWh/per capita per month. We reached an average 266 per capita; this
is due to the fact that in 2018 there were fewer personnel using the same facilities.
1 We incorrectly stated our 2018 target value in our 2017 report as 7.5, which was in fact our 2017 target. We noted that our end of 2017 3 year average performance was 9.7, not having achieved the 2017 target.
Hudbay 2018 Annual and CSR Report
| CSR Performance
87
CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
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Social Impact
Environment
CSR Performance
Target
Governance
Achievement
Details
Cascade updated values through the organization via
workshops at each Hudbay business unit, the production
of a values video by the CEO, and a face-to-face meeting at
each location with the CEO to discuss company values
Partially achieved
Financial excellence/growth
This was executed primarily within the operating business units. An example of cascading
values could be seen with the CEO site visit celebrating the Reed closure. In addition, two
videos were produced with engagement from Arizona, Peru, MBU and corporate.
Generate operating cash flow at or above budget targets
Achieved
Operating cash flow in 2018 was $493 million, compared to the target of $485 million.
Improve access to/cost of capital
Partially achieved
Grow net asset value per share by 8%
Not achieved
Rosemont stream agreement amended to de-risk provisions. Completed amendment and
extension of revolving credit facility to 2022. Rosemont financing plan advanced.
The target of growing NAV/share by 8% was not achieved, but the 2018 results do not
account for accretion as a result of the new Lalor mine plan and Rosemont permits in
early 2019.
Advance the development of the high-grade
Pampacancha deposit so that it can start to be mined
in 2019
Not achieved
Although we made progress with several important exploration initiatives, we were
not able to complete the necessary land access agreement to start mining the
Pampacancha deposit.
Advance permitting and technical work at the
Rosemont project
Achieved
We significantly advanced the permitting with receipt of the Record of Decision from
the US Forest Service. Subsequently, in March 2019, we received our key outstanding
water permit.
CEO Message
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Business and
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CSR Approach
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Social Impact
Environment
CSR Performance
Hudbay 2018 Annual and CSR Report
| CSR Performance
88
2019 TARGETS
HEALTH AND SAFETY
ENVIRONMENT
FINANCIAL EXCELLENCE/GROWTH
• Improve on our current three-year average lost time
• Maintain a score of A or higher in the new MAC TSM
• Maintain our industry-leading low-cost business to
accident severity of 10.5
• Improve on our three-year total recordable injury
Tailings Management protocol guidelines for Manitoba
and Peru
frequency average of 3.7
• Establish eco-efficiency measures in AFE process
• Fatality prevention – carry out a review of 2018 high-
potential incident investigations in order to identify and
propose investigation process improvement
COMMUNITY
• Define a framework for tracking well-being of
communities near Hudbay mines
• Perform gap assessments and create improvement
plans at each main location in order to finalize social
risk framework
GOVERNANCE
• Implement a company-wide Human Resources
Information System to support improved human
capital management. The 2019 project will establish
globally integrated employee information, which is
the foundation for developing and assessing our
workforce relative to our priority on people, inclusion
and talent development.
• Implement a revised Performance Effectiveness
Process to the manager level in Manitoba and to the
superintendent level in Peru. This is the next phase of
implementation of this process, emphasizing ongoing
coaching, feedback and development in role
conversations, which was piloted in the corporate office
in 2018.
continue to generate positive cash flow
• Complete a new reserve and resource estimate for the
Snow Lake operations, including our 100% owned Lalor,
Pen, Wim and New Britannia properties, and advance
plans for the refurbishment of the New Britannia mill
• Begin development of the Pampacancha satellite deposit
• Advance Rosemont through the final stage of
permitting and initiate early works activities
• Test promising exploration targets near Lalor and plan
near-term exploration programs in Peru, Chile, British
Columbia and Nevada
Hudbay 2018 Annual and CSR Report
| GRI Content Index
89
GRI CONTENT INDEX
GRI Standard Disclosure
Response, Page Number(s) and/or URL(s)
GRI Standard Disclosure
Response, Page Number(s) and/or URL(s)
GRI 101: Foundation 2016
General Disclosures
Organizational Profile
102-1
102-2
Name of the organization
Our Company
Activities, brands, products and services
Our Company
102-11
Precautionary principle or approach
102-12
External initiatives
Business and Financial Review
Business and Financial Review > Strategy
102-13
Membership of associations
CSR Approach > CSR Governance >
Precautionary Approach
CSR Approach > CSR Governance >
International Best Practice Standards
CSR Approach > CSR Governance > Human
Rights and Security
CSR Approach > CSR Governance >
Sustainable Development Goals
CSR Approach > CSR Governance >
Industry Involvement
Strategy
102-14
102-15
Statement from senior decision-maker
CEO Message
Key impacts, risks and opportunities
CEO Message
102-3
Location of headquarters
102-4
102-5
102-6
Location of operations
Ownership and legal form
Markets served
Our Company
Contact Us
Our Company
Our Company
CSR Approach > Responsible Supply
Chain > Products
102-7
Scale of the organization
Business and Financial Review
Business and Financial Review >
2018 Summary
Business and Financial Review >
Business Activities
CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
102-8
Information on employees and
other workers
Business and Financial Review > Financials
Our People
Ethics and Integrity
Our People > Our Approach > Employee
Relations
102-16
Values, principles, standards, and norms
of behaviour
102-9
102-10
Supply chain
CSR Approach > Responsible Supply Chain
Our People > Manitoba
CSR Performance > Key Performance Data
Significant changes to the organization
and its supply chain
CEO Message
Story > Rosemont Project: Planning for
the Future
Business and Financial Review > Strategy >
Financial and Business Objectives for 2019
102-17
Mechanisms for advice and concerns
about ethics
GRI 102-55 | 102-56
CSR Approach > Stakeholder Engagement
Social Impact
Social Impact > Our Approach
Social Impact > Manitoba
Social Impact > Peru
Social Impact > Arizona
Management’s Discussion and Analysis
Our Company > Vision, Mission, Values
Our Company > Business Conduct
CSR Approach > CSR Governance > CSR
Management Framework
CSR Approach > Human Rights and Security
CSR Approach > Responsible Supply Chain
Website > Policies
Our Company > Business Conduct
CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
Hudbay 2018 Annual and CSR Report
| GRI Content Index
90
GRI Standard Disclosure
Response, Page Number(s) and/or URL(s)
GRI Standard Disclosure
Response, Page Number(s) and/or URL(s)
Governance
102-18
Governance structure
Our Company > Board of Directors
102-26
Role of highest governance body in setting
purpose values, and strategy
CSR Approach > CSR Governance
Management Information Circular
Website > About Us > Management Team/
Board of Directors
102-19
102-20
102-21
Delegating authority
CSR Approach > CSR Governance
Executive-level responsibility for economic,
environmental and social topics
Our Company > Corporate Governance
CSR Approach > CSR Governancee
Consulting stakeholders on economic,
environmental and social topics
Story > Engaging Traditional Knowledge
Holders on Mill Refurbishment Project
102-22
Composition of the highest governance
body and its committees
CSR Approach > Stakeholder Engagement
Story > Economic Engagement with
Indigenous Communities
Story > Helping Students Launch
Experiments into Space
Social Impact > Our Approach
Social Impact > Arizona
Our Company > Corporate Governance
Our Company > Board of Directors
Management Information Circular
Website > About Us > Board of Directors
102-27
102-28
102-29
102-30
102-31
102-32
Collective knowledge of highest
governance body
Evaluating the highest governance body’s
performance
Identifying and managing economic,
environmental and social impacts
Effectiveness of risk management
processes
Review of economic, environmental
and social topics
Highest governance body's role in
sustainability reporting
102-23
Chair of the highest governance body
Our Company > Corporate Governance
Our Company > Board of Directors
102-34
Management Information Circular
Website > About Us > Board of Directors
Nature and total number of
critical concerns
GRI 102: General Disclosures 2016
102-24
Nominating and selecting the highest
governance body
Management Information Circular
102-25
Conflicts of interest
Our Company > Business Conduct
CSR Approach > CSR Governance
Annual Information Form
GRI 102-55 | 102-34 | 102-56
CSR Approach > CSR Governance
Website > About Us > Governance >
Corporate Governance Guidelines and
Board Charter
Annual Information Form
Website > About Us > Board of Directors
Website > About Us > Governance >
Corporate Governance Guidelines and
Board Charter
CSR Approach
CSR Approach > CSR Governance
CSR Approach > Human Rights
and Security
CSR Approach > Tailings Stewardship
CSR Approach > Stakeholder Engagement
Our Company > Risk Management
CSR Approach > CSR Governance
CSR Approach > CSR Governance
CSR Approach > Human Rights
and Security
CSR Approach > Stakeholder Engagement
Our Company > Business Conduct
CSR Approach > Human Rights
and Security
CSR Approach > Stakeholder Engagement
Social Impact > Manitoba
Social Impact > Peru
Social Impact > Arizona
CSR Performance > Key Performance Data
102-33
Communicating critical concerns
Our Company > Business Conduct
CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
Hudbay 2018 Annual and CSR Report
| GRI Content Index
91
GRI Standard Disclosure
Response, Page Number(s) and/or URL(s)
GRI Standard Disclosure
Response, Page Number(s) and/or URL(s)
102-35
Remuneration policies
Management Information Circular
Reporting Practice
102-45
102-46
102-47
102-48
Entities included in the consolidated
financial statements
Defining report content and topic
Boundaries
About This Report
Annual Information Form
CSR Approach > Materiality
List of material topics
CSR Approach > Materiality
Restatements of information
102-49
Changes in reporting
There are no restatements of information
from previous reports.
There are no significant changes from
previous reporting in scope of priorities.
102-50
102-51
102-52
102-53
102-54
102-55
102-56
Reporting period
About This Report
Date of most recent report
About This Report
Reporting cycle
About This Report
Contact point for questions regarding
the report
Contact Us
Claims of reporting in accordance with
the GRI Standards
About This Report
GRI content index
External assurance
GRI Content Index
CSR Approach > CSR Governance
GRI Content Index
Website > About Us > Governance >
Corporate Governance Guidelines and
Board Charter
102-36
102-37
102-38
102-39
Process for determining remuneration
Management Information Circular
Stakeholders’ involvement in remuneration Management Information Circular
Annual total compensation ratio
CSR Performance > Key Performance Data
Percentage increase in annual total
compensation ratio
Management Information Circular
Stakeholder Engagement
102-40
102-41
102-42
102-43
102-44
List of stakeholder groups
CSR Approach > Stakeholder Engagement
Collective bargaining agreements
CSR Performance > Key Performance Data
Identifying and selecting stakeholders
CSR Approach > Stakeholder Engagement
Approach to stakeholder engagement
CSR Approach > Stakeholder Engagement
Key topics and concerns raised
Our Company > Business Conduct
CSR Approach > Human Rights
and Security
CSR Approach > Stakeholder Engagement
Social Impact > Manitoba
Social Impact > Peru
Social Impact > Arizona
CSR Performance > Key Performance Data
GRI 102-55 | 102-56
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
CEO Message
Material Topics
GRI 200: Economic Standard Series
Our Feature Stories
Economic Performance
GRI 203: Indirect Economic Impacts 2016
203-1
Infrastructure investments and services
supported
Hudbay 2018 Annual and CSR Report
| GRI Content Index
92
GRI Standard Disclosure
Page Number(s) and/or URL(s)
GRI Standard Disclosure
Page Number(s) and/or URL(s)
Social Impact > Peru
We contribute to the development and
maintenance of local infrastructure and
services in the regions where we operate.
However, we have not calculated the
indirect economic benefits that flow to
local and regional communities from
our activities.
GRI 103: Management Approach 2016
103-1
103-2
Explanation of the material topic and
its Boundary
CSR Approach > Materiality
The management approach and its
components
CEO Message
Our Company > Corporate Governance
203-2
Significant indirect economic impacts
Social Impact
103-3
Evaluation of the management approach
Our Company > Risk Management
Procurement Practices
Business and Financial Review > Strategy
GRI 103: Management Approach 2016
Social Impact > Our Approach
Annual Information Form
Note: We re-evaluate our management
approach every three years as part of our
materiality review process; an evaluation
was last conducted in 2017.
103-1
103-2
Explanation of the material topic and
its Boundary
The management approach and
its components
CSR Approach > Responsible Supply Chain
CSR Approach > Responsible Supply Chain
103-3
Evaluation of the management approach
CSR Approach > Responsible Supply Chain
> Products
GRI 201: Economic Performance 2016
GRI 204: Procurement Practices 2016
Direct economic value generated
and distributed
CSR Performance > Key Performance Data
204-1
Proportion of spending on local suppliers
CSR Approach > Responsible Supply Chain
201-1
201-2
201-3
Indirect Economic Impacts
GRI 103: Management Approach 2016
Financial implications and other risks and
opportunities due to climate change
CDP Website
Defined benefit plan obligations and
other retirement plans
Management’s Discussion and Analysis
Anti-corruption
GRI 103: Management Approach 2016
103-1
103-2
Explanation of the material topic and
its Boundary
Our Company > Business Conduct
The management approach and
its components
Our Company > Business Conduct >
Compliance Training
103-1
103-2
Explanation of the material topic and its
Boundary
CSR Approach > Materiality
103-3
Evaluation of the management approach
The management approach and its
components
CSR Approach > Responsible Supply Chain
Social Impact > Our Approach
GRI 205: Anti-corruption 2016
Note: We re-evaluate our management
approach every three years as part of our
materiality review process; an evaluation
was last conducted in 2017.
103-3
Evaluation of the management approach
GRI 102-55 | 102-56
Social Impact > Manitoba
Social Impact > Peru
Social Impact > Arizona
Note: We re-evaluate our management
approach every three years as part of our
materiality review process; an evaluation
was last conducted in 2017.
205-1
205-2
205-3
Operations assessed for risks related
to corruption
Communication and training about
anti-corruption policies and procedures
Our Company > Business Conduct
Our Company > Business Conduct
CSR Performance > Key Performance Data
Confirmed incidents of corruption and
actions taken
Our Company > Business Conduct
CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
Hudbay 2018 Annual and CSR Report
| GRI Content Index
93
GRI Standard Disclosure
Page Number(s) and/or URL(s)
GRI Standard Disclosure
Page Number(s) and/or URL(s)
GRI 300: Environmental Standards Series
Biodiversity
Water
GRI 103: Management Approach 2016
Explanation of the material topic and
its Boundary
Environment > Our Approach
103-1
103-2
The management approach and
its components
Environment > Our Approach
Environment > Manitoba
Environment > Peru
Environment > Arizona
Story > Rosemont Project: Planning for
the Future
Story > Reed Mine: A Culture of
Stewardship from Construction to Closure
Note: We re-evaluate our management
approach every three years as part of our
materiality review process; an evaluation
was last conducted in 2017.
103-3
Evaluation of the management approach
GRI 303: Water 2016
303-1
303-3
Water withdrawal by source
CSR Performance > Key Performance Data
Water recycled and reused
CSR Performance > Key Performance Data
304-1
304-3
304-4
GRI 103: Management Approach 2016
103-1
103-2
Explanation of the material topic and
its Boundary
The management approach and its
components
103-3
Evaluation of the management approach
GRI 304: Biodiversity 2016
Operational sites owned, leased,
managed in, or adjacent to protected
areas and areas of high biodiversity
value outside protected areas
Environment > Our Approach
Environment > Our Approach
Environment > Manitoba
Environment > Peru
Environment > Arizona
Story > Rosemont Project: Planning for
the Future
Story > Reed Mine: A Culture of
Stewardship from Construction to Closure
Note: We re-evaluate our management
approach every three years as part of our
materiality review process; an evaluation
was last conducted in 2017.
CSR Performance > Key Performance Data
Habitats protected or restored
CSR Performance > Key Performance Data
IUCN Red List species and national
conservation list species with habitats in
areas affected by operations
CSR Performance > Key Performance Data
MM1: Biodiversity
MM1
Amount of land disturbed or rehabilitated
CSR Performance > Key Performance Data
MM2: Biodiversity
MM2
The number and percentage of total sites
identified as requiring biodiversity
management plans according to stated
criteria, and the number and percentage
of those sites with a plan in place
CSR Performance > Key Performance Data
GRI 102-55 | 102-56
CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
Hudbay 2018 Annual and CSR Report
| GRI Content Index
94
GRI Standard Disclosure
Page Number(s) and/or URL(s)
GRI Standard Disclosure
Page Number(s) and/or URL(s)
CSR Approach > Tailings Stewardship
GRI 103: Management Approach 2016
GRI 400: Social Standards Series
Employment
Effluents and Waste
GRI 103: Management Approach 2016
103-1
103-2
Explanation of the material topic and
its Boundary
The management approach and
its components
103-3
Evaluation of the management approach
GRI 306: Effluents and Waste 2016
Environment > Our Approach
CSR Approach > Tailings Stewardship
Environment > Our Approach
Environment > Manitoba
Environment > Peru
Note: We re-evaluate our management
approach every three years as part of our
materiality review process; an evaluation
was last conducted in 2017.
Water discharge by quality and destination CSR Performance > Key Performance Data
GRI 401: Employment 2016
306-1
306-3
306-4
306-5
MM3: Effluents and Waste
Significant spills
CSR Performance > Key Performance Data
Transport of hazardous waste
CSR Performance > Key Performance Data
Water bodies affected by water discharges
and/or runoff
CSR Performance > Key Performance Data
401-1
401-2
New employee hires and employee
turnover
Benefits provided to full-time employees
that are not provided to temporary or
part-time employees
Labour/Management Relations
103-1
103-2
Explanation of the material topic and
its Boundary
Our People > Our Approach
The management approach and
its components
Our People > Our Approach
Our People > Manitoba
103-3
Evaluation of the management approach
Story > Hudbay Women’s Network:
Fostering Gender Diversity in Mining
Our People > Arizona
Note: We re-evaluate our management
approach every three years as part of our
materiality review process; an evaluation
was last conducted in 2017.
CSR Performance > Key Performance Data
CSR Performance > Key Performance Data
MM3
Total amount of overburden, rock, tailings
and sludges and their associated risks
CSR Performance > Key Performance Data
GRI 103: Management Approach 2016
103-1
103-2
Explanation of the material topic and
its Boundary
Our People > Our Approach
The management approach and
its components
Our People > Our Approach
Our People > Manitoba
103-3
Evaluation of the management approach
GRI 402: Labour/Management Relations 2016
402-1
Minimum notice periods regarding
operational changes
MM4: Labour/Management Relations
Note: We re-evaluate our management
approach every three years as part of our
materiality review process; an evaluation
was last conducted in 2017.
CSR Performance > Key Performance Data
MM4
Number of strikes and lockouts exceeding
one week’s duration, by country
CSR Performance > Key Performance Data
GRI 102-55 | 102-56
CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
Hudbay 2018 Annual and CSR Report
| GRI Content Index
95
GRI Standard Disclosure
Page Number(s) and/or URL(s)
GRI Standard Disclosure
Page Number(s) and/or URL(s)
Freedom of Association and Collective Bargaining
GRI 103: Management Approach 2016
103-1
103-2
Explanation of the material topic and
its Boundary
Our People > Our Approach
The management approach and
its components
Our People > Our Approach
103-3
Evaluation of the management approach
Note: We re-evaluate our management
approach every three years as part of our
materiality review process; an evaluation
was last conducted in 2017.
GRI 407: Freedom of Association and Collective Bargaining 2016
407-1
Operations and suppliers in which the
right to freedom of association and
collective bargaining may be at risk
CSR Performance > Key Performance Data
103-1
103-2
Explanation of the material topic and
its Boundary
CSR Approach > Human Rights and
Security
The management approach and
its components
CSR Approach > Human Rights and
Security
103-3
Evaluation of the management approach
Note: We re-evaluate our management
approach every three years as part of our
materiality review process; an evaluation
was last conducted in 2017.
GRI 410: Security Practices 2016
410-1
Security personnel trained in human
rights policies or procedures
CSR Performance > Key Performance Data
CSR Performance > Key Performance Data
Security Practices
GRI 103: Management Approach 2016
CSR Performance > Key Performance Data
Occupational Health and Safety
GRI 103: Management Approach 2016
103-1
103-2
Explanation of the material topic and
its Boundary
Our People > Our Approach
The management approach and
its components
Our People > Our Approach
Our People > Manitoba
Our People > Peru
Our People > Arizona
Note: We re-evaluate our management
approach every three years as part of our
materiality review process; an evaluation
was last conducted in 2017.
103-3
Evaluation of the management approach
GRI 403: Occupational Health and Safety 2016
403-1
403-2
Workers’ representation in formal
joint management–worker health and
safety committees
Types of injury and rates of injury,
occupational diseases, lost days
and absenteeism, and number of
work-related fatalities
Non-discrimination
GRI 103: Management Approach 2016
103-1
103-2
Explanation of the material topic and
its Boundary
CSR Approach > Human Rights and
Security
Our People
The management approach and
its components
CSR Approach > Human Rights and
Security
103-3
Evaluation of the management approach
Note: We re-evaluate our management
approach every three years as part of our
materiality review process; an evaluation
was last conducted in 2017.
GRI 406: Non-discrimination 2016
406-1
Incidents of discrimination and corrective
actions taken
CSR Performance > Key Performance Data
GRI 102-55 | 102-56
Hudbay 2018 Annual and CSR Report
| GRI Content Index
96
CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
GRI Standard Disclosure
Page Number(s) and/or URL(s)
GRI Standard Disclosure
Page Number(s) and/or URL(s)
Rights of Indigenous Peoples
GRI 103: Management Approach 2016
Human Rights Assessment
GRI 103: Management Approach 2016
103-1
103-2
Explanation of the material topic and
its Boundary
Our People > Our Approach
The management approach and
its components
Our People > Our Approach > Diversity
and Inclusion
103-1
103-2
Explanation of the material topic and
its Boundary
CSR Approach > Human Rights
and Security
The management approach and
its components
CSR Approach > Human Rights and
Security > Security Practices
Social Impact > Our Approach
103-3
Evaluation of the management approach
103-3
Evaluation of the management approach
Story > Engaging Traditional Knowledge
Holders on Mill Refurbishment Project
Note: We re-evaluate our management
approach every three years as part of our
materiality review process; an evaluation
was last conducted in 2017.
GRI 411: Rights of Indigenous Peoples 2016
411-1
Incidents of violations involving rights of
indigenous peoples
Note: There were zero violations in 2018.
GRI 412: Human Rights Assessment 2016
412-2
412-3
Employee training on human rights
policies or procedures
Significant investment agreements
and contracts that include human
rights clauses or that underwent
human rights screening
Note: We re-evaluate our management
approach every three years as part of our
materiality review process; an evaluation
was last conducted in 2017.
CSR Performance > Key Performance Data
Website > About Us > Governance >
Supplier Code of Conduct and Ethics
CSR Performance
MM5: Indigenous Rights
MM5
Total number of operations taking place
in or adjacent to indigenous peoples’
territories, and number and percentage
of operations or sites where there are
formal agreements with indigenous
peoples’ communities
CSR Performance > Key Performance Data
Local Communities
MM6: Local Communities
MM6
Number and description of significant
disputes relating to land use, customary
rights of local communities and
indigenous peoples
MM7: Local Communities
MM7
The extent to which grievance mechanisms
were used to resolve disputes relating
to land use, customary rights of local
communities and indigenous peoples,
and the outcomes
CSR Performance > Key Performance Data
CSR Performance > Key Performance Data
GRI 102-55 | 102-56
Hudbay 2018 Annual and CSR Report
| GRI Content Index
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CEO Message
Artisanal and Small-Scale Mining
MM8: Artisanal and Small-Scale Mining
Closure Planning
GRI 103: Management Approach
GRI Standard Disclosure
Page Number(s) and/or URL(s)
GRI Standard Disclosure
Page Number(s) and/or URL(s)
Our Feature Stories
MM8
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
Number and percentage of company
operating sites where artisanal and
small-scale mining (ASM) takes place on,
or adjacent to, the site; the associated
risks and the actions taken to manage
and mitigate these risks
CSR Performance > Key Performance Data
103-1
Explanation of the material topic and
its Boundary
103-2
The management approach and
its components
Resettlement
GRI 103: Management Approach
103-1
103-2
Explanation of the material topic and
its Boundary
Social Impact > Our Approach
The management approach and
its components
Social Impact > Our Approach
103-3
Evaluation of the management approach
103-3
Evaluation of the management approach
Note: We re-evaluate our management
approach every three years as part of our
materiality review process; an evaluation
was last conducted in 2017.
MM10: Closure Planning
Social Impact > Our Approach
CSR Approach
CSR Approach
Social Impact > Our Approach
Social Impact > Manitoba
Story > Reed Mine: A Culture of
Stewardship from Construction to Closure
Story > Flin Flon Closure: Transparency
and Respect
Note: We re-evaluate our management
approach every three years as part of our
materiality review process; an evaluation
was last conducted in 2017.
MM9: Resettlement
MM9
Sites where resettlements took place, the
number of households resettled in each,
and how their livelihoods were affected in
the process
CSR Performance > Key Performance Data
MM10
Number and percentage of operations
with closure plans
CSR Performance > Key Performance Data
GRI 102-55 | 102-56
Hudbay 2018 Annual and CSR Report
98
CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
ABOUT THIS REPORT
Since 2014, we have combined our annual report and our
corporate social responsibility (CSR) report. We believe
social performance is as important as financial and
operating performance, and that combining the reports
presents a representative account of the Company’s
activities in 2018.
Our report covers all operating and project locations
reported in Our Company, as well as exploration
activities managed by Hudbay in Chile and British
Columbia during the 2018 calendar year. CSR report
content has been defined based on our materiality
analysis and aspects identification process, which applied
to all of Hudbay’s operating assets.
We published our Management’s Discussion and
Analysis of Results of Operations and Financial
Condition and the consolidated financial statements
for the year ended December 31, 2018, on February 19,
2019. Copies are posted on our website. The Business
and Financial Review section of this report covers the
content usually included in our annual report.
More information on the scope of our reporting is
available in the CSR Performance Data section of
this report.
QUALIFIED PERSON
We have produced an annual CSR report every year since
our 2003 report, and this is our 11th report based on the
Global Reporting Initiative (GRI) Sustainability Reporting
Guidelines. Our most recent previous report was released
in June 2018. This report contains standard disclosures
from the GRI Sustainability Reporting Standards, prepared
largely in accordance with the Core option.
The technical and scientific information in this annual
report related to the Constancia mine and Rosemont
project has been approved by Cashel Meagher, P. Geo.,
Hudbay’s Senior Vice President and Chief Operating
Officer. The technical and scientific information related
to our other material projects contained in this annual
report has been approved by Olivier Tavchandjian, P. Eng.,
GRI 102-45 | 102-50 | 102-51 | 102-52 | 102-54
Hudbay’s Vice President of Exploration and Geology.
Messrs. Meagher and Tavchandjian are qualified
persons pursuant to NI 43-101. For a description of the
key assumptions, parameters and methods used to
estimate mineral reserves and resources, as well as
data verification procedures and a general discussion
of the extent to which the estimates of scientific and
technical information may be affected by any known
environmental, permitting, legal title, taxation, socio-
political, marketing or other relevant factors, please see
the Technical Reports for the Company’s material
properties as filed by Hudbay on SEDAR at sedar.com.
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Hudbay 2018 Annual and CSR Report
99
CAUTION REGARDING
FORWARD-LOOKING
INFORMATION
This annual report contains “forward-looking information”
within the meaning of applicable Canadian securities laws
and “forward-looking statements” within the meaning of
the “safe harbor” provisions of the U.S. Private Securities
Litigation Reform Act of 1995. We refer to such forward-
looking statements and forward-looking information
together in the annual report as forward-looking
information. All information contained in this annual
report, other than statements of current and historical
fact, is forward-looking information. Often, but not
always, forward-looking information can be identified by
the use of words such as “plans”, “expects”, “budget”,
“guidance”, “scheduled”, “estimates”, “forecasts”,
“strategy”, “target”, “intends”, “objective”, “goal”,
“understands”, “anticipates” and “believes” (and variations
of these or similar words) and statements that certain
actions, events or results “may”, “could”, “would”,
“should”, “might” “occur” or “be achieved” or “will be
taken” (and variations of these or similar expressions). All
of the forward-looking information in this annual report is
qualified by this cautionary note.
Forward-looking information includes, but is not limited
to, production, cost and capital and exploration
expenditure guidance, anticipated production at our
mines and processing facilities, anticipated environmental,
health and safety performance, anticipated social
development programs, expectations regarding the
Company’s social licence to operate and stakeholder
relations, the expected benefits of implementing the
metallurgical recovery and optimization initiatives at the
Constancia processing plant and expectations regarding
the schedule for acquiring the Pampacancha surface
rights and mining the Pampacancha deposit, the
anticipated timing, cost and benefits of developing the
Rosemont project and any litigation challenging
Rosemont’s permits, anticipated exploration plans,
anticipated metals prices and the anticipated sensitivity of
our financial performance to metals prices, events that
may affect our operations and development projects,
expectations regarding the financing, sanctioning and
schedule for developing the Rosemont project,
expectations regarding the Lalor gold strategy, including
the refurbishment of the New Britannia mill, the low costs
of the operation and the possibility of optimizing the
value of our gold resources in Manitoba, the possibility of
converting inferred mineral resource estimates to higher
confidence categories, the potential and our anticipated
plans for advancing our mining properties surrounding
Constancia and the Ann Mason project, anticipated mine
plans, anticipated cash flows from operations and related
liquidity requirements, the anticipated effect of external
factors on revenue, such as commodity prices, estimation
of mineral reserves and resources, mine life projections,
reclamation costs, economic outlook, environmental
regulation and legislation and other government
regulation of mining operations, and business and
acquisition strategies. Forward-looking information is not,
and cannot be, a guarantee of future results or events.
Forward-looking information is based on, among other
things, opinions, assumptions, estimates and analyses
that, while considered reasonable by us at the date the
forward-looking information is provided, are inherently
subject to significant risks, uncertainties, contingencies
and other factors that may cause actual results and events
to be materially different from those expressed or implied
by the forward-looking information.
The material factors or assumptions that we identified
and were applied by us in drawing conclusions or making
forecasts or projections set out in the forward-looking
information include, but are not limited to:
• the schedule for the refurbishment of the New
Britannia mill and the success of our Lalor gold strategy;
• the ability to secure required land rights to develop
and commence mining the Pampacancha deposit;
• the success of mining, processing, exploration and
development activities;
• the scheduled maintenance and availability of our
processing facilities;
• the accuracy of geological, mining and metallurgical
estimates;
• anticipated metals prices and the costs of production;
• the supply and demand for metals we produce;
• the supply and availability of all forms of energy and
fuels at reasonable prices;
• no significant unanticipated operational or technical
difficulties;
• the execution of our business and growth strategies,
including the success of our strategic investments
and initiatives;
• the availability of additional financing, if needed;
• the ability to complete project targets on time and on
budget and other events that may affect our ability to
develop our projects;
• the timing and receipt of various regulatory and
governmental approvals;
• the availability of personnel for our exploration,
development and operational projects;
• maintaining good relations with the labour unions
that represent certain of our employees in Manitoba
and Peru;
• maintaining good relations with the communities in
which we operate, including the communities
surrounding our Constancia mine and Rosemont project
and indigenous communities surrounding the Lalor mine;
• no significant unanticipated challenges with
stakeholders at our various projects;
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Hudbay 2018 Annual and CSR Report
100
• no significant unanticipated events or changes
relating to regulatory, environmental or health and
safety matters;
• no significant unanticipated changes to the various
international and national standards we adhere to;
• no significant unanticipated changes to our water
usage, emissions intensity or energy intensity;
• no significant unanticipated changes in the political
climate in the various jurisdictions in which we
currently or plan to explore or operate;
• the ability to contemplate the effects of climate
change at our sites, on our operations and on the
extractive industry in general;
• no contests over title to our properties, including as a
result of rights or claimed rights of indigenous peoples;
• the timing and possible outcome of pending litigation
and no significant unanticipated litigation;
• certain tax matters, including, but not limited to,
current tax laws and regulations and the refund of
certain value-added taxes from the Canadian and
Peruvian governments; and
• no significant and continuing adverse changes in
general economic conditions or conditions in the
financial markets (including commodity prices and
foreign exchange rates).
The risks, uncertainties, contingencies and other factors
that may cause actual results to differ materially from
those expressed or implied by the forward-looking
information may include, but are not limited to, risks
generally associated with the mining industry, such as
economic factors (including future commodity prices,
currency fluctuations, energy prices and general cost
escalation), uncertainties related to the development
and operation of our projects (including risks associated
with the permitting, financing, development and
economics of the Rosemont project and related legal
GRI 102-3 | 102-53
challenges), risks related to the new Lalor mine plan,
including the schedule for the refurbishment of the New
Britannia mill and the ability to convert inferred mineral
resource estimates to higher confidence categories, risks
related to the schedule for mining the Pampacancha
deposit (including the timing and cost of acquiring the
required surface rights and the impact of any schedule
delays), risks related to the maturing nature of our 777
mine and its impact on the related Flin Flon metallurgical
complex, dependence on key personnel and employee
and union relations, risks related to political or social
unrest or change, risks in respect of indigenous and
community relations, rights and title claims, operational
risks and hazards, including unanticipated environmental,
industrial and geological events and developments and
the inability to insure against all risks, failure of plant,
equipment, processes, transportation and other
infrastructure to operate as anticipated, compliance with
government and environmental regulations, including
permitting requirements and anti-bribery legislation,
depletion of our reserves, volatile financial markets that
may affect our ability to obtain additional financing on
acceptable terms, the failure to obtain required
approvals or clearances from government authorities on
a timely basis, uncertainties related to the geology,
continuity, grade and estimates of mineral reserves and
resources, and the potential for variations in grade and
recovery rates, uncertain costs of reclamation activities,
our ability to comply with our pension and other
post-retirement obligations, our ability to abide by the
covenants in our debt instruments and other material
contracts, tax refunds, hedging transactions, as well as
the risks discussed under the heading “Risk Factors” in
our 2018 Annual Information Form (AIF), and otherwise
throughout this annual report.
Should one or more risk, uncertainty, contingency or
other factor materialize or should any factor or
assumption prove incorrect, actual results could vary
materially from those expressed or implied in the
forward-looking information. Accordingly, you should
not place undue reliance on forward-looking
information. We do not assume any obligation to update
or revise any forward-looking information after the date
of this annual report or to explain any material
difference between subsequent actual events and any
forward-looking information, except as required by
applicable law.
NOTE TO UNITED STATES
INVESTORS
This annual report has been prepared in accordance with
the requirements of the securities laws in effect in
Canada, which may differ materially from the
requirements of United States securities laws applicable
to US issuers.
CONTACT US
We invite your comments and questions about this report.
For investor relations matters, please contact
Candace Brûlé, Director, Investor Relations,
416 814-4387, investor.relations@hudbay.com.
For CSR matters, please contact David Clarry,
Vice President, Corporate Social Responsibility,
416 362-7364, david.clarry@hudbay.com.
Annual and Special Meeting of Shareholders
May 7, 2019, 10 a.m. ET
Toronto, Ontario
101
CEO Message
Our Feature Stories
Our Company
Business and
Financial Review
CSR Approach
Our People
Social Impact
Environment
CSR Performance
Hudbay 2018 Annual and CSR Report
GLOSSARY
Accident frequency – number of injuries (recordable
or lost time) multiplied by 200,000, divided by total
hours worked
Biodiversity – short for “biological diversity”; the variety
of living organisms, genetic diversity and habitat diversity
that creates and sustains variation in the environment
Community investment – voluntary investment of
funds in the broader community, including for physical
infrastructure and social programs
Conflict-free minerals – mineral production that does
not contribute to serious human rights abuses in regions
of armed conflict (drawing on the definitions provided in
the Dodd–Frank Act)
Contractor – one who agrees to perform work or supply
items at a certain price or rate
Donations – contributions to charities
Employee – a person directly employed by Hudbay and/
or its subsidiaries
GHG emissions – greenhouse gas emissions
Global Reporting Initiative (GRI) – an independent
institution whose mission is to develop and disseminate
globally applicable sustainability reporting guidelines.
For more information, visit globalreporting.org
GRI Standards – performance indicators contained in
the GRI Sustainability Reporting Standards
Grant in lieu – an amount paid instead of property taxes
Lost time accident (LTA) – a work-related injury that
prevents the injured person from returning to work on
his/her next scheduled workday after the day the injury
occurred, because he/she is unfit to perform any duties
MAC – Mining Association of Canada
Material information – a fact or a change to the
Company that could reasonably be expected to have a
significant effect on the market price or value of the
securities of the Company
N/ap – not applicable
N/av – not available
Restricted work – a work-related injury where a licensed
health care provider or the employer recommends that
the employee not perform one or more routine job
functions or not work the usual full workday
Tailings – the fine waste rock that remains after
separating the valuable minerals from the ore during
mining and processing of mineral resources. Tailings may
contain trace quantities of metals found in the host ore,
as well as added compounds used to extract the minerals
TSM – Towards Sustainable Mining, an initiative of the
Mining Association of Canada