Although mining suffers from a negative reputation among the general public, the communities surrounding the San Vicente mine in Peru’s Chanchamayo province have a different view. For more than 40 years, the San Vicente mine has been much more than a mere source of employment – the company that operates the mine, SIMSA, has been an intimate partner of the people, providing them with opportunities for self-improvement, thanks to the vision of its founder, Jesus Arias.
In 1966 SIMSA, which stands for Compañia Minera San Ignacio de Morococha S.A.A., took over the task of operating the San Vicente mine explored in the 1960s by Compañia Minera San Vicente, owned by Cerro de Pasco Corporation and Hoschild. In 1970 SIMSA had the mine up and running, producing 27,000 MT of zinc concentrates at a plant with a capacity of 250 MT per day, processingthat year ore with an average grade of 23% zinc.
The mine produced in excess of 98,000 MT per year for more than 18 years (1982-1999), reaching a high of 130,000MT/y of zinc concentrates between 1998 and 1999 – making SIMSA one of Peru’s largest privately owned producers of zinc concentrate. San Vicente, an underground trackless mine, was operated with the latest state-of-the-art technology and machinery, a true showcase for the other mining companies.
Last year, production was at an all time low at around 37,000 MT but the company has been working throughout 2012 to considerably improve production.
“We have a concentrator plant (3,000 MT/d) that produces very clean and high-grade concentrates of 60-62% Zn and 50-60% Pb, and we plan to produce at full capacity within the next five years and increase reserves to support such levels of production,” says Isabel Arias, Vice-President and Don Jesus’ daughter. “In 2012, production should be around 60,000 tons of zinc concentrates and increase 10-15% every year thereon until full capacity of the plant.”
She attributes the decline in production to a halt in investment in exploration for more than a decade – which she describes as “the biggest sin you can commit in mining” – due to shareholders’ disagreements. However, “all that is changing now”. In March 2012, SIMSA signed an agreement with Trafigura Beheer BV and Korea Zinc Company that includes a long-term credit facility for up to $20million, four offtake agreements, and technical support, especially in exploration programs. This credit facility helped SIMSA reorganize its finances, provide enough cash flow to complete 2012 investment requirements and accelerate a strong exploration program.
“We true miners
know that there is
always a light at the
end of the tunnel”
Jesus Arias Davila,
Late President of the
Board of SIMSA
“With the right team and investment, we’ll become one of the lowest production costs, highest quality producing zinc mines in the world. We’ve done it before, so I don’t see why we can’t do it again,” claims Ms. Arias.
Luis Seijas, General Manager at SIMSA, agrees that SIMSA will soon be restored to its former glory: “SIMSA has a deposit containing several ore-bodies of 11-12% zinc, and although today it is indeed lower, I am certain we can regain historic high grades and large volumes and efficiencies.”
In addition to the San Vicente Mine, the company has also some 60,000 hectares of mining claims in the same geological formation, in the Junin and Pasco regions. Besides investing in exploration around the San Vicente area, Mr. Seijas says that the company is open to cooperation, support and joint ventures with investors in order to realize the full potential of the mining district.
Jesus Arias broke the mold of a traditional mine operator, establishing close and interactive relationships with his workers, their families and the communities. “My father made everyone feel part of a family and as a result, we all wanted our company to be successful. He made us proud to be part of SIMSA: ‘La familia SIMSA’,” reminisces Ms. Arias. “He was ahead of his time in social responsibility practices and developed a very special relationship with the inhabitants in the surrounding villages.”
He was fully committed to promote development in the area, he built schools and sponsored infrastructure of different sorts. He was very well respected and well known by most. Don Jesus’ daughter believes it was this trust and solidarity that protected him and the company from terrorist attacks. Unlike many of his counterparts, he visited and worked at the mines during the worst bouts of terrorist activities. “I feared when he went to the mine because it was a ‘red zone’, full of violent terrorists, but he told me his life was not more valuable than the life of the people who worked at the site,” Ms. Arias remembers.
Ms. Arias and Mr. Seijas both fondly remember Don Jesus, who passed away last November, as a pioneer in mining and social responsibility in Peru; a man who was totally committed to Peru and the people.
“There are many testimonies on how he touched numerous lives, of how he successfully motivated them to become managers, entrepreneurs or executives,” says Ms. Arias.
The VP and the GM intend to carry on with Don Jesus’ legacy and good works for the community, especially in education, sports and in the development of sustainable economic alternatives, ideally using resources in their surrounding area as well as continuing to reduce the mine’s environmental footprints. They are fully committed to restore the company’s former status of excellence as a major player in the international zinc market with social and environmental responsibility.