Volcan has opted to invest in renewable energy generating projects for its own supply and third parties, along with its own electric transmission systems with the objective of lowering its cost structure, counting on a higher energy availability in its mining operations and reducing its greenhouse gass emissions.
As a result of this vision the Rucuy 20 MW hydroelectric plant, located in the Pacaraos district, province of Huaral, began commercial operations in August 9, 2016, with an approximated investment of USD 50 MM. The plant produced 36 GWh in 2016. Rucuy has a 20-year renewable energy contract (RER) with the Energy and Mines Ministry in represesantation of the Peruvian government.
With the opening of Rucuy, Volcan's installed power capacity over hydraulic plants in its mining units reaches a total of 63 MW. The hydrolectric plants of Baños and Tingo contribute a total of 23 MW, while the Huancho hydroelctric plant contributes with 19.7 MW. The Baños hydroelectric plant supply energy directly to the Chungar unit.
In total, Volcan's energy consumption reached 635 GWh in 2016, with a maximum power demand of 84 MW, which represented a 4.5% reduction in comparison with 2015, due to a consumption reduction in the Cerro de Pasco unit. The self-generation represented 21% of the total energy consumption, while the rest was supplied by ELECTROPERU through the SEIN, backed by a contract with validity until December 31,2017.
The Chungar unit generated 138 GWh through its ten hydroelectric plants in 2016. This represents a 15% reduction in comparison with 2015 due to a rain shortage in the region.
Compañía Hidroléctrica Tingo S.A.C. is proprietary of a 1.25 MW generation plant with 82 km of trnasmission lines in 50 and 22.9 kV. In 2016 it generate 9 GWh, which where transmitted to Chungar. Tingo counts with an expansion project of the current plant up to 15 MW, which is currently being developed.
On the other hand, Hidroeléctrica Huanchor S.A.C. (Huanchor), proprietary of the hydrolectric plant of Huanchor, with an installed power of 19.7 MW, produced 139 GWh in 2016, which represented a 4.5% decrease in comparison with 2015, due to a higher 30-day maintenance of Group N° 2's generator. Huanchor is member of the COES and during 2016 it held electricity supply contracts with eight clients (three mining companies and five energy distributors).
During 2016, the unitary cost of energy per metric ton of treated mineral reached 5.4 USD/MT, which, in absolute terms, represented an annual energy cost of USD 41.9 (11% of Volcan's operating costs).
On July 19, 2016 a new electricity supply contract was signed with the energy generation company ENGIE, which will come into force on January, 2017 for Alpamarca and on January, 2018 for the rest of the units; and will remain in force until December, 2023. These contracts guarantee electricity supply for the next 7 years at very competitive prices in the energy market. Signing said contracts will help improve Volcan's cost structure by saving significant amounts in the total energy supply cost.
Finally, it is important tu mention that in 2016 a 99.93% and 99.9% annual availability was accounted for in the Yauli and Chungar-Alpamarca electric systems respectively, without considering preventive costs. This indicator shows the continuity level of the electric supplies for operations, considering that 100% means less energy outages and, therefore, higher availability.