Diego Hernández – appointed as the man to head the mining branch of Luksic group
25-Jul-2012 Pulso – News
After leaving Codelco his name was immediately heard as the one to undertake the main open position in the Chilean mining company; CEO of Antofagasta Minerals. He took it easy and let himself be loved; firstly he expressed his intention to undertake a position in a board of directors; then he took vacations; and yesterday, he was appointed as top executive to head the mining branch of the Luksic group undertaking immediate challenges
Diego Hernández’ career has two landmarks: From his Base Metals President position in BHP Billiton he was responsible for the Minera Escondida consolidation, and so was he for Collahuasi development, one of the three most important mines in the country. Between 2010 and 2012 all the gained experience was put to the test: taking all his expertise – gained in private mining industry – to Codelco, the most important state-owned company in the country. Although at the beginning he could spread out his cards by implementing changes nobody else had ever dared to carry out, the end was sudden, unexpected, and disappointing: in the middle of the dispute with Anglo American and at the very start of the most ambitious investment plan in the history of the corporation, he left the company after having had some discrepancies with the Board of Directors.
Then, hermetic secretiveness. Although not very clearly, he expressed he was interested in taking part of private companies board of directors, that he was somehow tired of the CEO day-to-day duties. So did he say about too intruding board of directors, as it was the case of the Professional Council of Codelco with offices set in Codelco’s headquarters to monitor the operations. Upon his departure from Codelco his name was immediately put into the air in Antofagasta Minerals, however he just let himself become the object of affection .
An then, after weeks trying to convince him (although it has been heard that his appointment was prepared even before his leaving Codelco, which has been certainly refused by sources in Antofagasta Minerals), finally, yesterday, Hernández was appointed CEO of the mining branch of Luksic group.
The appointment took Government by surprise. It was not quite well received that former President of Codelco was going to join Antofagasta Minerals as the latter is a strategic partner of Mitsubishi Corporation in Los Pelambres mine, the rival of the state-owned company in the legal action that is being carried out for the 49% ownership of Los Bronces.
On this regard, Minister of Mining, Hernán de Solminihac, stated that he trusted the former Codelco executive and particularly as it refers to honoring the confidentiality agreement with respect to the legal dispute.
“They have the right to hire anyone they consider suitable and, consequently, those are decisions the companies and professionals freely make. We hope Diego Hernández will honor the non-disclosure agreement Anglo and Codelco have signed; for the rest of the situation there is no problem for us”, the Mining authority asserted yesterday.
Style
Hernández leaving the state-owned company was explained by the style differences arisen between his and Board of Directors’ styles, and specifically with Chairman Gerardo Jofré who, per Hernández’ opinion, got too much involved in functions that are not within the Chairman tasks but CEO’s. However, Jean Paul Luksic’s role in Antofagasta Minerals is not too far from Jofré’s. Some sources in the industry have explained that the President of Antofagasta plc uses to get very involved in the day-to-day activities and he uses to be aware of the complete details of the company operation. … or should we better say “his” company operation.
This is one of the key hurdles Hernández must leap over in order not to repeat the situation that did not allow him to make history as Codelco CEO and develop the future projects portfolio of Codelco. It may be a sign that after Marcelo Awad left the position Hernández is now taking, Luksic provided some in-house details of the company additional to the non-fulfillment of goals cause to explain the reasons for which Awad was laid off.
Exactly like when Diego Hernández assumed in Codelco undertaking an investment portfolio of about US$15 billion, his new assignment exceeds by far the US$14 billion.
Main challenges
But before that, two previous challenges arise: The biggest one refers to solving the Esperanza issue. The mine had the purpose of increasing Antofagasta Minerals production results but instead problems have been coming one after the other.
First one dealt with seawater use which in an unprecedented engineering initiative was used without being desalinated. The equipments corrosion resulting from this is an issue that is still being solved.
The second issue in Esperanza is rock hardness which was underestimated in mine design and mining plan.
Another key challenge is Reko Diq. The project Antofagasta Minerals is realizing together with Canadian Barrick is now being settled at the ICSID after the Government of Balochistan rejected, for the second time, the permission to operate the mine.
