"While the boom in mining metallurgical industry ..."
Pierre Duhaime

executive vice president / SNC Lavalin
By Laura Superneau

EnviarImprimirComprar Rights ReproduccionMientras the boom in mining metallurgical industry has spawned giant mining projects and even dreamed of sizes, the Canadian SNC-Lavalin has managed to swim with the tide.


The engineering and construction company recently settled in Brazil with the acquisition of Minerconsult Engenharia and has numerous projects with a portfolio of over U.S. $ 1.000mn.


In this interview, the executive vice president of SNC-Lavalin, Pierre Duhaime, who has headed the mining and metallurgical operations of the company at the international level, BNamericas reveals the logic behind the acquisition of Minerconsult and gives its opinion regarding the impact of the booming industry for service providers.


BNamericas: What prompted the acquisition of MinerConsult by SNC Lavalin?

Duhaime: First, is a mining metallurgical engineering firm. Its main product is iron ore and its largest customer is CVRD, which now is called Vale.


It is a company that has about 20 years old and has 1,100 employees. I would say that about 50% of employees working with iron ore and the other 50% is dedicated to the operations of nickel, copper, bauxite and gold up, but everything is linked. In mining there are elements such as Crusher, transportation systems and that sort of thing, is the aspect of engineering projects and they excel in that area. But over the years have also developed aspects of processing and we are building a processing plant with them.


BNamericas: What are building such a plant?


Duhaime: In this case, it is a major project, with large quantities of material to transport and major infrastructure. They are well known in the industry in these areas. And in this case it is the Barro Alto nickel project of Anglo American, which will produce ferronickel in ovens. It's a pretty big project, U.S. $ 1.200mn, and is being constructed at this moment.


BNamericas: What other projects will participate through the purchase of MinerConsult?


Duhaime: From time to time we become engineers key to the region. It is one of the customers and has many projects. But before that we had agreements with venture MinerConsult for a turnkey contract in which we take care of them sought and construction, engineering. Now we developed the turnkey method.


BNamericas: When is expected to be ready the Barro Alto project?


Duhaime: There are about 20 months to finish.


BNamericas: What level of production will?


Duhaime: It is an operation of about 40.000t / a nickel, which is enough. It is a giant oven.


BNamericas: Does the acquisition of MinerConsult will give them more opportunities to grow in Brazil?


Duhaime: Certainly. Before we had a very modest presence in Brazil. In the rest of South America were already fairly entrenched, but we resisted expand in Brazil. First, because the language was a problem, but also because Brazil is considered a very nationalistic country. So I explained to them by Vale: "You came to Canada and bought Inco, now I have to follow my client". Now decision makers for Inco are in Brazil. And I asked: "What do I need to do business with you?". And they replied: "You have to be near us." So I had to move to Brazil! And upon arrival we decided to buy a company. We had to choose between open an office and try to grow organically or acquire a company.


In addition, SNC Lavalin had little presence in the segment of iron ore, which is now beginning to attract large investments worldwide. So it should be in Brazil, and also in Australia. In Canada there is also something of iron ore in Africa and projects are beginning to appear. Therefore, it was important for me to gain experience with iron ore.


BNamericas: You mentioned gold projects in Brazil?.


Duhaime: We are working with Kinross in Brazil to expand its Paracatu mine. It was a contract MinerConsult, and now runs under SNC Lavalin. The project is progressing very well, because we have almost finished. It is less than a year to complete.


BNamericas: Let us move to another country, you are working on the project gold and copper Brisas Gold Reserve, in Venezuela. How that progresses?


Duhaime: We have almost completed the engineering. We have commissioned most of the equipment. It started some work on the project, but not the big construction because it is still awaiting the final approval, which depends on obtaining some permits from the Government of Venezuela. We are moving in slow motion, we are waiting. But we're ready to start.


It is a good project. And when comparing the two projects, Las Brisas and Las Cristinas [project adjacent to Crystallex International], we have done exactly the same work in both. They are two separate projects, but nearby, are separated only by a fence.


BNamericas: SNC Lavalin have an important office in Chile. What are the major projects that are there?


Duhaime: We are working in Peru, from our office in Chile, with the La Granja project [Rio Tinto]. In Chile also manage our work in the Las Cruces project that has Inmet Mining in Spain. We also work in the Olympic Dam project [BHP Billiton], in Australia. Also, we are just beginning another study in Peru, the Toromocho copper project [of Peru Copper].


BNamericas: Can you talk a little more progress of works being done in La Granja?


Duhaime: We are still working on the study prefeasibility study. We are more concerned with the demonstration plant, we are working on the engineering of this plant, which is to be developed. Then, we should conduct another study to develop the process. It is a huge project that requires a lot of infrastructure, but still do not know how it will be, nor how much it will cost or where the plant will be located. It is a complicated project. The metallurgical process itself is not complicated, but the distribution of the facilities in general it is because there is no flat land and water is a real problem. That is what we are studying.


BNamericas: It will be an open pit operation, does correct?


Duhaime: Yes. A deposit open pit low-grade, but giant.


BNamericas: Are They are also working with Rio Tinto in its potassium project in Argentina?


Duhaime: We have completed the feasibility study. In this project we are also associated with Skanska. So we're hoping that we give full authorization to proceed.


BNamericas: The construction of the project is scheduled to begin this year.


Duhaime: That we hope!.


BNamericas: What are the consequences for a company like SNC Lavalin when a project is delayed?


Duhaime: Our resources are our money. We have our team on the spot and customers want to keep it there, but at the same time we need to mobilize to send people to other projects.


BNamericas: Are contracts awarded to SNC Lavalin is involved in the bidding process organized by the companies?


Duhaime: Yes, we participate in bidding processes. But in some cases are outsourced. Sometimes it just becomes a process of classification. Today in the market there are more people interested in establishing relations. They want to maintain relationships and show us his list of projects for the next five years. There is now talk increasingly of establishing alliances. And when it ventures into such alliance, and this is not exactly a bidding process.


BNamericas: As a major supplier of services for the mining industry, what do you think the wave of consolidations that the sector has undergone? Is it a trend that facilitates or hinders their work?


Duhaime: I would say that what makes it difficult to some extent. What is changing now is that you can no longer make mistakes. If commit serious errors with a major customer, as well, is that the customer can represent 25% of your business. Previously, it was working with 50 customers, not just one to represent such an important part of the business. Therefore, we must be much more careful with the quality of services provided.


On the other hand, I would say that projects are becoming larger. When I started working in this business, a project of U.S. $ 100mn constituted a major contract. And so I'm not old!


Now the project can start at U.S. $ 1.000mn; even there are projects costing U.S. $ 10.000mn. Olympic Dam is worth more than U.S. $ 10.000mn. In Brazil, for example, Vale has a project [which will cost over U.S. $ 10.000mn], Valesul, and we are working with them on that. The rules of the game have changed. And now the question arises: how do you manage U.S. $ 10.000mn? How organized? In that case, it is better to be a big company. Everyone wants top-level enterprises. Xstrata, BHP Billiton, all saying the same thing: "If you're not a top level, nor bother to contact us."


BNamericas: That, in turn, leads to the absorption of small suppliers by the larger ones. There is also a trend of consolidation in the sector of you ...


Duhaime: Exactly. It is the only way. Those of MinerConsult also realized and that is why they were interested in selling the company. If they wanted to continue on foot within 10 years, or only 5, it might be better [for MinerConsult] find a major partner. I was interested in establishing in Brazil, so I had to find a partner smallest.


BNamericas: So arguably winning both left?


Duhaime: Yes. And we have made other acquisitions, and continue looking for more. Not just.


BNamericas: Could other Latin American companies interested?


Duhaime: Always. But elsewhere ... Now we operate in Chile and Brazil, and hopefully grow more in Peru. In Chile, many projects have emerged, and we believe that in Peru it was time to make big enterprises. In fact, today there is more potential in Peru in Chile. Therefore, we must find ways to tap the potential of Peru, and we are working on that.
By Laura Superneau