TBY talks to Manuel Bonilla, President of Barrick Pueblo Viejo, on prospects for the mine, human resources, and gold production.
THE BUSINESS YEAR With an investment near $4 billion, the Pueblo Viejo mine will allow the Dominican Republic to participate in today’s global gold market. How much has Barrick Gold invested so far and in which areas?
MANUEL BONILLA At the end of 2011, we had invested over $3.2 billion, and we’re moving closer to the inauguration date, which is slated for September 2012. The exact number will be determined by an external auditor: SGS/FGS. This is a very large and complex mine, especially from the point of view of production capacity and physical size; it will be mining gold, silver, and copper while displaying a showcase of best practices in the industry. The other issue that makes the mine special and complex is that the original tender posted by the government for this project started out as a remediation of the area of Pueblo Viejo. The mine was closed for 14 years, and during that time, acid rock drainage from the site was very significant and contamination from metals and other chemicals was present. In 2006, Barrick Gold took on the project, which was only on paper, and redefined the project using new technology. Under that redefinition and renegotiation of the contract, investment was increased significantly, but the reserves were doubled. Total reserves and forecasted revenues from the mine grew by almost 100%.
What state-of-the-art technology will Barrick Gold introduce to Pueblo Viejo?
The technology was selected considering environmental impact. We selected a technology that, for mining our specific types of ores, has the least potential impact on the environment—autoclave technology. This is the fifth mine in the world that uses autoclave technology, and here we have the biggest autoclaves in the world. This marks a very interesting step forward for Barrick Gold. Since this plant is so new and complex we have brought a significant number of expatriates here for the start of operations and to train local employees that are now learning about autoclave technology. At the scale we are operating it, it is something totally new. The land on which the plant is now located was heavily contaminated and has been cleaned up. About 115,000 cubic meters of contaminated soil was collected and removed, most of which was treated locally, and the rest was packaged to be shipped and treated at international facilities. We have already improved the water quality in the area by removing those contaminants. Our plant is a very large operational, as it uses state-of-the-art equipment and will become Barrick Gold’s global flagship mine, with the latest technology in terms of environmental protection and extraction methods, as well as its relevance for the company.
Barrick Gold’s social investments will help local farmers by improving health, nutrition, and education. How much has the company invested in social responsibility initiatives to date?
Within the next five to ten years, we will see improvements in the quality of life in the area surrounding the mine, which is a very deprived area. The levels of education and income in the area are below the national average. One of the things we’ve been doing, as part of our focus on sustainability, is linking all projects to local branches of government and agencies to build the local capacity to generate development with both company and government funds. In addition, we’re investing in a number of small projects around the mine related to environmental care, management, and education. That’s because environmental remediation was our main priority when taking on the mine. In everything we do, we remember that environmental remediation and stewardship are our guidelines. To develop an area, you need education. Development without education simply will not work. These are the points that we support on every project that we undertake, in addition to the funds we offer to municipalities.
What are the most innovative aspects and long-term benefits for the community of Pueblo?
We are working with institutions in the Dominican Republic, the municipalities, and their mayors. Often there are accusations that money from these projects is misappropriated by local governments, but the real issue is that many of these mayors have never had any training on how to deal with this amount of money—they are very small towns, with limited experience managing these kinds of budgets. We’ve started conducting workshops with people and authorities to discuss the types of projects that could be launched with these funds—their impacts and potential costs—and worked with them to implement abandoned legislation: laws 170 and 176 from 2007, and law 340 from the year 2000. However, we’re not just doing CSR, and instead of offering this money without guidance we’re expecting that our contribution will improve the institutionalization of the regional governments.
What infrastructure projects have you invested in?
For a mining project you need a series of basic elements, the first being access. In this case, access existed, but the roads needed to be improved. Simply transporting the equipment to the site was an engineering feat. Conditions of the road, bridges, electric wiring, and commercial signage needed upgrades to able to get the extra large and heavy equipment through. A ship had to be specially designed just to bring the autoclaves to the site because there wasn’t a ship in the world that could handle them. Now, these upgrades are permanent parts of the infrastructure of the country, and a few other companies, such as power companies, have passed equipment along these roads that previously would not have accommodated their needs. That investment was made entirely by Barrick Pueblo Viejo, because it was originally for our purposes. We also invested in upgrading power capacity. We are building a 430-MW plant divided in two groups—two 215-MW plants side by side as a long-term energy solution for Pueblo Viejo.
What is your assessment of the quality and eagerness of the Dominican labor force, and has it been challenging to find well-trained people in the country?
We’ve had mixed results. Because mining is not a traditional activity in the country, there is a lack of mining experts. However, we have found many employees of different levels, from professionals such as engineers and geologists, down to technicians who had no prior experience but are being trained. Probably within two or three years we will begin exporting staff to mines across the world. We understand that we need people with the right attitude and basic education who are ready to do further training. Our workforce will become around 1,200 people on a permanent basis. We have around 1,650 today, with 450 in training. Over the next 15 years, we will reduce our expatriate force to about 10% of its current size.
What is your expected production in gold by the end of 2012?
Our target for 2012 is around 200,000 ounces. We know that in the first year we may reach 25% above or below that target because there are so many variables. We’re talking about four months worth of production in 2012, from September to December. That’s our target, and it may be subject to variations. We will go into production with maybe two autoclaves, but there are two more that are not yet operational. Once we go into production from 2013 onward, we will be able to very accurately forecast our results. We will also be doing a full exploration of the area to determine our exact reserves. We have the potential to extend production. We may be able to extend from 25 years of production to maybe 40 years, depending on additional reserves. However, extending the length of the project is something we probably won’t consider for at least three or four years, until we’ve fully started production and have resources dedicated to further exploration. Right now, we have confirmed the presence of 23.7 million ounces of gold.
How do you see the development of the mining industry in the country in the future?
The Dominican Republic certainly has potential to be a mining country. I believe that there will be further significant mines in the country, but they will come over time. Significant exploration started a few years ago and it will take a long time to develop that. If these mines are operated with the view of making stewardship of the environment the prime focus, then they can operate in the country along with agriculture and tourism, which are our main industries. In this regard, mining could support the development of these other industries in a positive way.
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© The Business Year - August 2012