Introduction & Context
The Antamina Mining Company (“CMA”) faced a set of critical decisions related to technical, logistical, political and financial challenges for establishing copper and zinc mining operations in a remote area of the Northern Peruvian Andes in the 1990s. This analysis is based primarily on the SEKN Case Study from March 5, 2007, entitled “Moving Mountains: The Case of the Antamina Mining Company”. Specifically, we considered the following questions that were raised by CMA’s General Manager within the case:
1) In the first Environmental Impact Assessment (”EIA”) that CMA published in 1998, the company laid out a plan to transport concentrate from the mine to a port facility near the coastal city of Huarmey using existing roads, where possible, and constructing new sections of highway, where necessary. This plan included using a route that passed directly through the environmentally sensitive Huascaran National Park (“PNH”). Following a series of challenges with extensive social / political and financial implications, CMA had to consider; should they change their original transport plans? If they did change, which alternative project option should be chosen? And, how would they justify their decision to their stakeholders and business partners?
2) If CMA decided to stick with their original plan, how could the company recuperate the trust of their current opponents?
3) How could the company relocate the [resident] families of San Marcos, specifically in the face of construction deadlines that needed to be pushed up, as well as concerns raised by CMA’s Community Relations executive?
4) Finally, CMA’s Senior Management were facing considerable internal tensions as a result of decisions taken on the new mine project. How could these tensions be managed to keep them from having a negative long term impact on the company?
In addressing these questions, our team have drawn from facts provided in the SEKN Case, personal accounts of individual team members and current course materials. The analysis concludes with a recommended course of action that considers both associated risks and related mitigation plans.
1) Should CMA Change The Original Transport Route?
CMA recognized several transportation options for consideration: 1. Develop the existing central route through the Huascaran National Park 2. Construct a new highway route on the southern border of the park 3. Build a new, leading edge technology Pipeline to move concentrates, while also developing an access route (either through the PNH or along the southern border).
The mining company’s original plan relied on a number of key factors, including stable sources of financing, logistics / transportation plans that utilized existing infrastructure, “known” levels of risk to the environment, co-operation of the local population and an acceptable resettlement package for those residents that would have to be moved as a result of the project. Where that plan fell short initially was in not properly considering the strength of resistance that could come from local residents, the government, environmentalists and, perhaps most importantly, key financiers. In retrospect, we believe CMA should have created a ‘Stakeholder Map’ to help them better understand the impact that each transportation option would have had on the various project stakeholders (see ‘Figure 1’ below). Figure 1 – Stakeholders’ View of Transportation Options
| |Financiers |Local Residents – |Local Residents - |Internal Engineering |Other Internal Shareholders | | | |Miners |Fishermen | | | |Existing ‘Central’|(-)Unacceptable risk to national |(-)More road accidents |(+)Improved main |(+)Minimal upgrades...