During the mining industry crisis, cost-cutting initiatives were widespread, creating pressure on providers to reduce costs. While some of these initiatives aimed at improving efficiency, such as incorporating new technologies, others had unintended consequences. This article explores the impact of cost-cutting measures on mining operations and the strategies employed by companies in Peru to add value and maintain quality service.

In the face of the crisis, mining companies sought to incorporate the latest technology for productivity and safety. Long-term contracts were offered to contractors, anticipating a price increase as the mining cycle recovered. Geotec, for example, invested $12 million in new equipment and secured three-year drilling contracts with Las Bambas and Yanacocha. These investments allowed for fleet renewal and the adoption of hands-free technology and automation, aligning with industry trends.

While some companies focused on low-price strategies during the crisis, others prioritized service quality. AK Drilling International expanded its drilling fleet and maintained a strong emphasis on service quality. Contractors assert that clients must understand the value of quality service and the investment required, rather than solely considering the lowest price. Investing in new technologies carries risks if the market prioritizes cheap drilling without recognizing the value of advanced services.

Contractors, such as Geotec, are undertaking their own technology development to add value. Geotec is not only utilizing standardized third-party equipment but also developing its own rigs in collaboration with Safedrill. For instance, they have designed a modular rig with a smaller footprint and hands-free capabilities. Such technological advancements contribute to improved safety, productivity, and operational efficiency.

Laboratory analysis providers are also facing challenges in avoiding commoditization of their services. Local and international players, like Certimin and SGS, are incorporating new technologies and focusing on geo-metallurgy, integrating geology and metallurgy in the analysis process. Certimin offers a comprehensive approach covering the full cycle of geology and metallurgy, providing personalized service and specialized testing options. SGS is working on software to allow real-time sample tracking and pushing for an integrated approach to core samples.

The blasting segment experienced pressure on rates and shorter contracts, impacting optimization processes. Longer-term contracts are becoming the trend, but the market remains competitive. Blasting solution providers, including Exsa and EPC Groupe, emphasize demonstrating value beyond the price. Exsa’s Quantex technology has contributed to the company’s market share growth, while EPC Groupe aims to mechanize underground processes through smart modules and technological advancements.

New mining projects, such as Quellaveco and Mina Justa, are driving growth in the explosives market. With increased demand for explosives in early works and production phases, the blasting market in Peru is expected to experience double-digit growth. The entry of multinational companies like EPC Groupe highlights the attractiveness of Peru’s mining industry, with a focus on mechanizing underground processes for improved productivity, safety, and environmental performance.

While cost-cutting initiatives were prevalent during the mining industry crisis, mining companies and service providers are now focusing on adding value and maintaining quality service. Incorporating new technologies, offering comprehensive solutions, and emphasizing the value of quality service are key strategies employed by contractors, laboratory analysis providers, and blasting solutions companies. By striking a balance between cost-cutting and value-driven approaches, the mining industry in Peru aims to achieve sustainable growth and operational excellence.