IPESA works in both the agricultural sector and mining. How was performance impacted by the pandemic in 2020?

Overall, 2020 ended up being a great year for IPESA, which, considering the conditions, was surprising even to us. As we moved out of the lockdown in July and August, the recovery was much faster than expected, and we ended up growing 15% in 2020 in comparison to 2019. During the pandemic, the agricultural sector was one of the few sectors that was allowed to continue operating. Since our company is not only a machine provider but also a service provider for this sector, we were able to continue operations on a limited basis throughout the pandemic, providing services and parts to essential sectors in Peru.

At the end of the first lockdown, government and private investment had a quick turnaround, so we saw an important increase in machine spending in the second half of the year. Business results accelerated going into Q4, and 2021 has started on the same trajectory. Despite the tragedy, the pandemic has allowed us to solidify business relationships with our most important clients.

Which of the mining equipment IPESA distributes has been in high demand in recent months?

IPESA started expanding its mining services in 2020. In terms of heavy machinery, we tripled our presence by adding two 85-ton Hitachi ZX-870 excavators.  These are currently working in Shougang’s Marcona iron-ore mine south of Lima, and in gold mines in Cajamarca.

This is an important footprint expansion for the company, because our focus within mining has traditionally been with support equipment; mostly material movement during the pre-construction phase of the mine as well as general road maintenance. Additionally, we have focused on innovation and non-traditional equipment for the transportation of materials. For example, IPESA commercializes Morooka equipment, a Japanese rubber track carrier that allows for greater flotation. These machines are currently working in the San Rafael tin mine with Minsur. Finally, Wirtgen surface miners continue to revolutionize traditional mining as they avoid the blasting step in the mining process.

How is IPESA participating in the transition from diesel machines to hybrid and electric equipment?

There is a desire to move towards electric equipment, but Peru is slightly behind because of the greater cost that this technology demands at the moment. In mining and construction, IPESA has a variety of hybrid equipment; specifically, John Deere front loaders and excavators. On the Wirtgen Group side, our Kleemann equipment (crushers) come with electric generators and engines in conjunction with the traditional diesel engine.  This allows for significant cost savings in fuel consumption when compared to other equipment.

IPESA’s new logistics center in Lima was inaugurated in September, 2019. What extra capacity does this give the company, and how does this benefit clients?

With over 17,000 square meters for parts and equipment, our logistics center has tripled IPESA’s spare-parts availability and has centralized our machine dispatch. It has reduced delivery time from the moment of purchase by about 40%, and doubled our machine warehousing capacity. The reduced lead times and greater inventory capacity has greatly benefited our clients.

Why do you think the integration of agriculture and mining is important?

Peru has always been an agricultural country, long before it started moving towards mining, and therefore many mining projects are located nearby agricultural land. The greatest challenge the mining industry faces in Peru is its relationship with local communities. The country is traditionally suspicious of large foreign corporations and governments, so rather than leaving the integration process up to the authorities, the burden is on private companies to bridge this divide. At IPESA, we have always worked closely with local communities, and provide them with training so they understand the benefits of potential added business when it comes to mining operations. We also provide operating training if their desire is to transition from the agricultural sector to the mining industry.

In our experience, when a company is transparent and has a good relationship with the communities, there are no issues with project development. There is a path to collaboration between local communities and mining companies where both parties can benefit from a responsible investment in mining.

Moving forward, what is IPESA’s strategy for growth in the mining industry?

We have just completed IPESA’s new five-year strategic business plan, which includes increasing the company’s footprint in the mining industry. The mining sector is currently dominated by a handful of equipment providers, and we do not believe that this is in the best interest of mining companies or the local communities. Our goal is to consolidate IPESA as a viable and more productive alternative to these legacy providers, by demonstrating the value-add of our machinery, our world class service, and continuing to work closely with local communities.