What were the major economic challenges faced in 2023?

In 2023, Peru experienced economic contraction, with growth hovering below 0%. Mining initially propelled the economy, but momentum waned in the latter half. Other sectors witnessed declines, further contributing to the downturn. The fuel market contracted by nearly 14%, while lubricants saw a 7% decrease.

Amidst this backdrop, Terpel in Peru had a favorable year. We expanded our market share, particularly in the lubricants sector. In fuels, we fortified our wholesale business for B2B consumers, emphasizing enhanced service delivery. While we have not ventured into mining wholesale due to supply and storage needs, we are progressing. Our trajectory aims to start small and medium-scale mining operations before advancing to large-scale mining within five years, leveraging our regional expertise.

What are the main focuses of investment in the lubricant plant in Callao for 2024?

For 2024, we have allocated US$3 million for automation, transitioning to a new energy matrix, and refining our blending process. These upgrades aim to double our production capacity to meet local demand and expand into neighboring countries.

We are installing an in-line blender, poised to revolutionize our mixing procedures. Unlike conventional methods involving pre-mixing additives in a separate tank before blending, our in-line blender facilitates simultaneous blending of base oils and additives, resulting in an instantly mixed and homogenized final product. This innovative approach eliminates the need for intermediate storage, significantly streamlining operations.

Our investment also includes robotics for packaging, eliminating manual intervention, and automating storage processes for seamless loading onto trucks. Beyond cost reduction, automation ensures a safer working environment by minimizing human error and associated losses.

How did the company's growth manifest within the mining sector?

We have seen significant growth, expanding our presence among mining contractors and within the mines. A strong product offering and service arm drive this success. Interestingly, as our presence in some mines grows, the volume of lubricants used may decrease due to extended oil life processes or the adoption of advanced lubricants. This reduces environmental impact and ensures safer and more energy-efficient operations.

Within these mining environments, we have established comprehensive in-house operations. Here, we oversee lubricant dispatch and provide lubrication services for timely application. We also manage oil analysis through laboratory facilities at our Callao plant and on-site laboratories at select client sites. This analysis is a valuable diagnostic tool, revealing machine condition, wear levels, and remaining oil life. It enables us to optimize oil change intervals based on machine needs rather than predetermined schedules.

How does Mobil Delvac Modern benefit the mining industry?

We have fostered strong partnerships with OEMs and launched our specialized line, Mobil Delvac Modern, which caters to the mining sector and is specifically designed for the Chilean and Peruvian industries.

With Mobil Delvac Modern, machines no longer need downtime for oil changes. Instead of the usual 500 hours, we can now extend it to 1,000 hours. The significant impact will manifest in three to four years as equipment engines, typically maxing out at 20,000 hours, will exceed 25,000.

Which innovations is Terpel currently working on in the mining industry?

Our main focus centers on transmissions and differentials, where significant energy losses occur. Our efforts extend beyond improving lubricants; we also enhance oil quality through cleaning services, potentially slashing energy consumption by up to 6% and resulting in significant cost savings.

One of our projects involves onboard oil changes for equipment and simultaneous oil filtering during operation. This initiative has garnered great appreciation from OEMs, given that oil contamination is a significant concern in the mining industry. Contaminated oil accelerates wear levels, which is particularly problematic in high-altitude open-pit mines. Implementing onboard filtration systems effectively addresses this issue.

However, the challenge arises from the rugged conditions of mining equipment operation, marked by uneven terrain and high vibration levels. We are in the testing phase of a prototype in Chile designed to withstand these harsh conditions. We plan to scale up and introduce it in Peru, ensuring optimal performance in demanding environments.

What are Terpel's goals for 2024?

On the production front, we are focused on maximizing the efficiency of the in-line blender in Callao, which will significantly reduce operational costs. Our wholesale division is poised for exponential growth in the fuels sector, aiming to double its performance from 2023.