Legal Guidance on Two Continents

Five ways Hudbay Minerals' legal eagle is helping keep far-flung mining operations connected and compliant

Coordinating legal oversight for a growing international mining firm means that Patrick Donnelly, vice president of legal and corporate secretary at Hudbay Minerals, must keep his eyes trained on multiple operations across the Americas. “Since I started at Hudbay, the company has been very oriented toward growth,” he explains. “Last year, we acquired an operation in Peru, and we opened exploration offices in Chile and Colombia, all of which helped to extend our global footprint.” With experience in private practice and at Tim Horton’s, Donnelly now manages the legal group of a hemisphere-spanning mining operation.

1. Deliver anticorruption training to employees

The Foreign Corrupt Practices Act requires companies doing business abroad to combat corrupt practices, even in foreign operations. Hudbay Minerals Inc. takes this responsibility seriously, providing instruction for all employees, in Canada and abroad, about unacceptable practices. “We want to make sure that everyone has the same values in all of our operations, regardless of the jurisdiction,” Donnelly says. In Peru, for instance, the company retained a lawyer to explain its anticorruption policy and applicable antibribery laws to workers in Spanish. “We prefer in-person training sessions,” Donnelly says. “In the past, companies sent policies around and said, ‘Everyone read this,’ but we want to be proactive and make sure our employees have actually learned and carry out the policy.”

2. Hire local talent

Hudbay operates on a decentralized business model, with individual business units operating in different countries and reporting back to its Toronto headquarters. In Peru, it has three local lawyers on its in-house legal team. “We’re comfortable giving them autonomy,” Donnelly says. Hudbay is currently negotiating contracts in Peru in advance of commencing construction at the site. “These are primarily local matters that are governed by Peruvian law,” Donnelly explains. “We don’t want to have the corporate office looking over the shoulders of our Peruvian colleagues when they have the expertise to handle things locally.”

3. Promote regular communication

With operations separated by time zones, languages, and cultures, Donnelly needs to keep a steady line of communication open between headquarters and its far-flung business units. “They function more or less independently,” he explains. “But we have calls with the legal teams every couple weeks to see what they are doing and to tell them what the company is doing at a corporate level. We want our operations abroad to remain involved at a strategic level.” Additionally, much of the company’s business requires international coordination. For example, the financing for the Peru mining operation is being assembled by lawyers in Manitoba, New York, and Peru.

4. Don’t overreach

The company recently sold a nickel project in Central America. The nickel operation didn’t fit in with the company’s focus on copper and zinc. “We had just acquired the project in Peru, and we started developing a new project in Manitoba,” Donnelly says. “They took up most of our current capacity to develop projects. We have a lot of technical expertise, but undertaking three development projects at the same time would have been a strain on our resources. The project Hudbay sold would also have required a huge capital commitment in a risky environment, so the company opted to realize value by selling it. Such a decision plays into the company’s strategy. “We don’t want to spread ourselves too thin,” Donnelly says.

5. Proactively manage risk

“When the company was considering its strategy a couple of years ago, it wanted to  grow outside of Manitoba,” Donnelly says. “So it concentrated on regions in the Americas that are politically stable, mining friendly, and safe places to invest money.”

Moreover, Hudbay avoids locations with volatile or shaky governments, or places with regulatory environments too restrictive or hostile to mining. Given its overseas operations, the company risks fines and reputational damage if individual employees engage in local corruption. In order to deal with that danger, in addition to employee education, the company has implemented controls designed to prevent employees violating anticorruption rules. “You have to make it so that one person can’t go and write a cheque or buy a car all by himself and hand it over to someone,” Donnelly says. “We make sure our financial people know exactly where company money is going at all times.”