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Striking Gold: The $40m Idea Unearthed Through Crowdsourcing

Hochschild Mining is a leading silver and gold mining company based in Lima, Peru. In business for over a century, the company continues to be run by the Hochschild family to this day. In 2020 alone, it produced almost 10m ounces of silver and 175k ounces of gold from its three active mines across South America.

Hochschild’s innovation initiatives are focused on optimizing its current operations through continuous improvement, with a particular focus on corporate responsibility. As part of this, the firm is committed to minimizing its environmental impact, keeping its employees safe, and creating social value within the communities in which it operates.

To deliver on those goals, Hochschild gathers ideas from right across its company to reduce waste and improve its processes. After trying to manage these ideas using Google Docs, the mining business transitioned to Qmarkets’ continuous improvement solution Q-optimize in 2019. Since then, Hochschild has used the platform to gather and develop the collective intelligence of its workforce, driven by a system of incentives and rewards.

We recently caught up with Juan Fernando Correa, the Projects Analyst at Hochschild who is responsible for leading the company’s crowdsourcing initiatives. He tells us all about how his company gathers ideas using the Qmarkets platform and the process by which they decided to use it. Most excitingly, he discusses some of Hochschild’s successes on the platform, including an idea forecasted to create a staggering $40m of added value over the lifetime of one of their mines.

Hochschild Mining: an Introduction

Qmarkets: Hi Juan, thanks for taking the time to sit down with us today. Please could you start by telling us a bit about yourself and Hochschild Mining as a whole?

J: Of course. I am a Projects Analyst at Hochschild, but I trained as a mechanical engineer. I’ve been working here for four years, focusing on new projects for the operations department and reporting directly to the CEO. These range from digitalizing our mines to finding ways to make our production more efficient.  As part of this, I work closely with the innovation team which focuses on bringing new and challenging ideas to the company. That’s why I’ve been engaging with the Qmarkets platform, to enable anyone at the company to bring forward new and interesting ideas for innovation in mining.

Currently, Hochschild has three mines under operation: two in Peru and one in Argentina. We have about 4,000 employees in total across all the countries in which we operate. Ten of those are on the innovation team. Most are frontline, in the sense that they are based at the mines.

Q: Could you tell us about the challenges your company faces? What drives innovation investment? 

J: Our sector has some high-risk aspects. Although you try to map underground resources very diligently, there’s still a margin for error once you go underground. You have to try to be as efficient as you can with the resources you have in order to compensate for that possible error. In that search for efficiency, new processes and ways of doing things come in really handy and make a tangible difference to the operation of our mines.

There’s a real drive for innovation and efficiency, even from the CEO. Innovation is one of our four company pillars. One of the reasons it’s a focus for us is that mining as an industry has not undergone too many changes over the past few decades… I think this is because it tries to be as efficient as possible all the time. If you have something that isn’t broken, you won’t necessarily try to fix it because you always want to be working and delivering.

We realize that you can create a significant step-by-step set of improvements that will benefit you in the long-term – and I think that realization is an important one.

The thing that stood out was that Qmarkets showed the most flexibility when designing a workflow. It was the platform that we thought we could really use to tailor our process the most.

Mining Ideas for Continuous Improvement

Q: What was your involvement in choosing the Qmarkets platform, and what type of ideas were you looking for?

J: We wanted to focus on ideas for continuous improvement. Our thinking was that ideas would mostly come from frontline workers which would streamline, improve and optimize our day-to day-processes.

We were working with the CEO for some years to try to enable anyone in the company to bring their ideas to light. We initially started with Google Docs which we sent out as a submission form of sorts for people to share projects and ideas.

At that stage, this was a mandatory process. People were initially forced to submit at least one idea annually. And having put that into action, we soon realized there were a few things we could improve. The first of these was trying to engage people by inspiring genuine interest in sharing ideas rather than forcing them to share.

There was also a need to evaluate ideas more efficiently, in as much as we would receive hundreds of ideas a year and going through each was a long process. I’m not an expert in all of the fields that the ideas were coming from, so we needed to have experts looking at them.

We came up with the idea of developing our own system but before going ahead with that, we wanted to check if there was already a software we could use right away. That’s when we came across Qmarkets, and after evaluating variousoptions, we decided to go with you.

Q: What stood out about Qmarkets?

J: The thing that stood out for us was that Qmarkets showed the most flexibility when designing a workflow. It was the platform that we thought we could really use to tailor our process the most. Other providers already had a pre-established process and were hard to configure, whereas the Qmarkets system was very customizable. That was something that we really wanted because we didn’t know what direction our program was going to take, so having that flexibility was important.

Q: It would be great to hear about how you manage your campaigns. Does the process vary from one to another?

J: We’ve been generating different workflows for different campaigns. For innovation in mining, some campaigns require a more in-depth technical evaluation, and for those we need more evaluation stages. Whereas when you have campaigns that are related to less tangible ideas like improving the well-being of workers, you’ll need fewer filters.

One thing that’s quite unique about our process is that we perform an evaluation of every single idea that is submitted to the system. We’ll usually conduct a preliminary one .The local department head in question has to give a green or red light to an idea and, after that, the head of all metallurgical plants has to approve it too.  So it’s not just based on which ideas get the most likes and comments; we try to look at every idea. The final decision is made by the country committee, or the CEO if it requires a bigger investment.

Q: Do you find that the management of the platform occupies a lot of your time?

J: No, it doesn’t. It requires more time when we’re launching a new campaign or going through the final stages of evaluation. But otherwise, ideas are already being passed through other evaluators in the system. I would say that I maybe check the platform on average, once every three days just for some light maintenance. The platform’s automation features are very useful because evaluators get notified directly rather than me having to ask for their help manually.

Q: Do you use any kind of internal promotion tools or incentives to get people to participate in the workflows?

J: We have a lot of onsite communications at the mines, which includes posters, pamphlets, and newsletters. Email is the main way we communicate internally, and we’ll send those out when there’s a new campaign or an important project that has been implemented.

In terms of incentives, they are predominantly financial. The amount we award users for successful ideas is calculated on a case-by-case basis depending on the campaign. Users also get points for likes and comments on the platform, and if they reach a certain number of points they can trade them in for a small gift like a water bottle or a keychain.

The $40m Idea

Q: Could you tell us about the most successful innovation that came from an idea submitted to the platform?

J: This project came from a campaign we released during COVID, relating to efficiency, which is one of our four company pillars. We wanted everyone in the company to recognize the sort of challenges that affect the efficiency of our operations. In answer to that campaign, the metallurgical plant team at one of our mines identified a possible decrease in their recoveries of gold and silver.

Recoveries are the percentage of valuable mineral that you can extract from the rock, and so that decrease directly affected the efficiency of our process. The team came up with the task of identifying ways to improve the efficiency of the plant and bring those recoveries up.

This has resulted in almost $40 million of added value over the next seven years.

They did multiple lab tests and they performed a very in-depth analysis. They realized that the most efficient way to increase recoveries was to increase leaching times. Leaching is the process by which you mix cyanide with the mixture of grounded rock that contains silver and gold. They found that you can increase recoveries by leaching for a longer period with the same amount of cyanide.

They then presented a project that would involve adding another leaching tank to the mine and connecting it to the others. These tanks are huge: around eight to nine meters in diameter and 15-16 meters tall, so it was quite a big engineering project. The investment required was around $2.5 million.

Q: And what were the results?

J: We were able to increase gold recoveries by almost 1.5%, and the silver recoveries by around 5%. They might sound like small numbers, but in mining even half a percent is already a huge deal. In our case, this has resulted in almost $40 million of added value over the next seven years. So, it’s really quite a significant amount.

To thank the team for their discovery, we gave them a financial reward and they also had a very personal meeting with the CEO where they were recognized for their work. We sent out a newsletter as well, telling the rest of the company about their project.

Employees: a Sustainable Source of Eco-Friendly Ideas

Q: Fantastic! Are there any other great ideas that you’ve had from the system?

J: Yes! We ran two campaigns in 2021 on ways to become an even more environmentally friendly company. One campaign was about reducing our water consumption and the other was about reducing our waste generation.

Both campaigns gave rise to tangible projects for the Waste Generation Project campaign. We found a more efficient way to clean our underground machines. By changing the detergent and using a water jet sprayer, we were able to really reduce water consumption. And as a result of our campaign focusing on minimizing waste, we managed to cut down on around 19 tons of waste a year.

We’re continuing to launch campaigns, particularly ones relating to environmental opportunities. We aim to continue our sustainability efforts, and a lot of our campaigns will be directed towards that. On the whole, we want to make our processes more efficient through innovations that involve our frontline workers and everyone in the company.

Overall it’s been a very good experience. The team has been really attentive of our progress. The platform itself has enabled new ideas to pop up and it’s given a louder voice to our people on the frontline.

Q:  One last question: if you were to offer any advice to another company setting up an innovation management platform, what would it be?

J: The most important thing is to have a supportive executive team, but also to really take time to teach everyone about how the platform works – that’s crucial in the first few weeks of implementation.

Another thing to consider is that when you launch a program like this, you need to be active and engage with everyone at the company. Once people submit their ideas, they want to see what happens with them. And you need to be ready to reach out and interact.

Blurring the Lines Between Incremental and Disruptive Innovation in Mining

We loved hearing about Hochschild’s successes using Q-optimize to improve their operations and deliver on their sustainability mission. It was particularly interesting to learn that a single idea for a process improvement is set to benefit the company by a staggering $40m. It serves as a valuable reminder that disruptive or radical innovations aren’t the only ones that offer huge returns…smaller changes to processes identified as part of a continuous improvement program can be just as lucrative.

Another key takeaway for us was the evolution of the way in which Hochschild gathers ideas from its employees. Like many companies, Hochschild had been using Google Docs to collate ideas before finding dedicated software, but more unusually it had been mandatory for each employee to contribute at least one idea per year. They then decided to make contributions voluntary but encouraged them through a system of financial incentives and rewards, and we heard exactly how successful this approach has been!

To find out how Qmarkets can help you to deliver continuous improvement at your organization, contact us for a free demo today.

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