Daniel Malchuk, president of BHP Minerals Americas “I hope this crisis encourages us to make the changes we need for the future of mining”

In conversation with Cesco’s executive director, Alejandra Wood, in a new episode of Copper Matters, the BHP executive reflected on the impact and challenges the industry has had to face in the context of Covid-19 and reviewed part of the measures the company has taken to contain the spread of the virus and maintain operational continuity.

For the industry, it has been a period of complexities never seen before. The pandemic has put the resilience of the sector to the test, which has been forced to re-evaluate the way it has operated until now, in addition to seeking new strategies to cope with the difficulties.

This is well known to Daniel Malchuk, president of BHP Minerals Americas, that in a new episode of Copper Matters -a series of free webinars organized by Cesco and CRU-, he was interviewed by the executive director of the center, Alejandra Wood, to talk in-depth about the measures that the company has taken to face the pandemic and the mechanisms that the industry has adopted to continue operating.

“The last five months have been extremely challenging, but also very rewarding”, said the executive. “I am very proud of our employees and some of the things we have accomplished in this period, despite all the challenges we face”.

“This situation led us to take a 360-degree look at how to contribute to society, collaboratively with the mining industry, government authorities, universities, the communities we are part of, and our workers”, Malchuk explained.

Regarding their operations in the region, the executive explained that, given the levels of contagion in Brazil, they had to reduce or stop the restart and remediation works at Samarco, their joint operation with Vale. A similar situation was experienced in Antamina and Cerrejón, in Peru and Colombia respectively, which were paralyzed for between four and six. “We have also seen some impacts in North America, in the Jansen projects in Canada and Resolution in Arizona, United States. In the case of Canada, there were some restrictions, as in other parts of the world, in terms of people’s ability to travel between regions, so we had to suspend some of the activities there”, he added.

On the impacts of the pandemic in the future, the president of BHP Minerals Americas explained that it is too early to forecast it. “I think we still don’t know exactly how things will play out in the future. Having said this, it is very likely that the industry will face some cost pressures as a result of the pandemic”, Malchuk said, noting that the costs associated with managing the health crisis have increased, especially concerning the controls that have been implemented in the sites.

“Obviously there have been some impacts on some of the maintenance activities that we have to do, in the way we do it, with a small number of people, etcetera, and obviously any impact on production will have an impact on costs. But it is not all bad news”, added the executive. “We have actually learned quite a few things, good things. For example, we have an integrated operations center, which manages some of the mine areas remotely, and which has given us greater flexibility in our Escondida and Spence operations here in Chile”.

“The pandemic has forced us to re-evaluate the way we work. We needed to prioritize, simplify, find new ways of doing things, and use new technologies, and I hope this crisis will help us encourage ourselves to make the changes we need for the future of mining”, said Malchuk.

A resilient sector

The executive explained that the company’s copper production for the fiscal year 2020 (ended in June), was slightly higher than the previous year. However, they forecast that by 2021, and due to Covid-19, volumes will be slightly lower, due to the reduction of the workforce in operations, which has dropped between 30 and 40% compared to the normal levels recorded before the pandemic.

Regarding the sector’s response to this situation, Malchuk pointed out that “the industry has led the way in this area. A key objective for us has been to demonstrate that operational continuity is compatible with the health and safety of our people, our priority”.  To this, the president of BHP Minerals Americas added that the sector has a relevant weight in the economy, so its operational continuity contributes to coping with the crisis associated with the pandemic. “We feel the responsibility of being able to continue operating, since we know the multiplier effect that this industry has with many other areas of the economy, in addition to the direct benefits it generates”.

“I think this industry has navigated well through this crisis and has done so by displaying the best attributes for which we are known. I mean good planning, analysis, and discipline in execution, said the executive. “These are not times to celebrate, but to recognize the strengths that we have built as an industry”.

“Nobody really knows how long the pandemic will last, but we are planning everything on the basis that it will last a long time. I want to be clear, this is not something that will come and go very quickly. We continue to be very vigilant in terms of controls”, Malchuk added. “We cannot lower our guard. I think this is the time to continue applying, as I mentioned before, the strengths that we have as an industry in terms of discipline in execution. I think we have to continue to be on the alert and I think that yes, it can change the way we work in the future. The good news is that we have managed to find a way to fix it and people are getting used to that, after the initial effort we had to put in”.

Coping with a pandemic

Malchuk noted that, to a large extent, being able to continue operating at BHP has depended on the workers and their high level of commitment to continue working in difficult conditions. “What we have achieved at BHP so far would not have been possible without the support of our team, who have truly shown that they are empowered and willing to collaborate and participate in the solutions”.

The executive added that measures have been progressively implemented, starting with the demobilization of people who operated in risky conditions (due to their age or medical conditions), and the reduction of workers in the operation, in addition to reducing some of the non-essential activities on site.

BHP has taken various measures related to health and hygiene, especially in canteens, camps, and personnel transport, to name a few. In addition to this, they have followed the recommendations of the World Health Organization, in terms of testing, tracking cases, and isolating those who are infected. “We have tested practically our entire workforce, with rapid tests and we continue with PCRs. For tracking, we have been using an application that can be downloaded to the phone and that helps us to track people, where they were when there is a Covid suspect”, Malchuk said.

Among other measures, and like other companies in the sector, BHP installed health residences to isolate those who are not from the region where the operation is located, and who have contracted the virus or are close contacts, providing the necessary health care for the quarantine period.

“The health and safety of our people are at the center of all the decisions we make”, said the executive. “We have had a lower incidence of cases and in fact, in the last four to six weeks since we have incorporated a mass testing approach we have found many more asymptomatic than symptomatic people”.

In this sense, the company enabled 14 points in the country to test workers, so that they can go voluntarily before starting their shifts. “We have applied approximately 80 thousand tests: 70 thousand rapid tests and around 10 thousand PCRs in the last two or three months. It has been a huge effort”, Malchuk added.

The impact on the company and the technological boom

The executive explained that for some BHP projects, such as the Spence Growth Option in Chile, there have been some delays regarding the date to start the production, which is projected to run between the end of this year and March 2021. However, before the pandemic, the project had reached its peak in its construction, so they decided to continue with less endowment, going gradually from more than 7 thousand workers to about 2,500.

Malchuk further noted that they have not seen any impact on the supply chain. “Our business has been quite resilient, our supply chain has remained open and we have had adequate supplies to operate and maintain critical equipment”. To this, he added that according to the results of the second quarter of 2020, “we have had very solid results in Escondida. The production increased to more than 4%”.

“Obviously, this does not mean fewer challenges. We have to adapt the way we operate and maintain operational continuity, take some special measures to support our supply chain. We have worked hard to make sure we have the right level of inventories to support us in the event of possible interruptions and we have also taken a series of actions to support our suppliers”, said the executive, who explained the scope of some of the programs they have built as BHP to support local suppliers.

Malchuk stressed that productivity has remained stable, which is why he considered that another learning of the pandemic has been that things can be done differently, and in this technology has played, and will play, a fundamental role.

“For me, the pandemic has reinforced the importance of something that we knew was very relevant, which is flexibility, and when faced with challenges, flexibility is important. And technology has provided an advantage”, said the executive, who gave an example of the integrated operations center, which allows the coordination of the production areas of Spence and Escondida in real-time from Santiago.

“In addition to the integrated operations center, other projects that we have implemented are generating an enormous amount of data, and the data has allowed us to really drive better decision making and to extract more value from our resources”, said Malchuk. The president of BHP Minerals Americas also highlighted the role that technology has played in holding meetings that previously required the mobilization of people.

“I think the pandemic, in general, has forced us to re-evaluate the way we work, we have needed to prioritize and consider new ways of doing things, and new technologies”, reflected Malchuk. “The best part of this is that the pandemic has shown us that there are different ways of doing things, better ways, safer, more efficient and that is something that really opened our eyes”, concluded the executive.