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Power for Mining
Turnkey-Ready
for Mining
Grupo Mexico has developed the most innovative turnkey plant with
the technological support of Siemens. It is the largest user-owned
­electric power plant in Latin America. La Caridad Power Plant will allow
Grupo Mexico to cut costs in electricity by 40 percent and help the state
of Sonora and the country by supplying power to the grid.
Text: Chris Kraul Photos: Adriana Zehbrauskas, Chris Kraul, Michael Vetter
W
ith a smile and a twinkle in
his eye, Vidal Muhech Dip
welcomes visitors to his cor­
ner office in Grupo Mexico’s head­
quarters building in Mexico City’s
swank Polanco district. Muhech, who
is General Director of Engineering
and Construction at the world’s fifthlargest copper miner, is an engaging
raconteur and speaks with a firm
grasp of details, especially when the
conversation turns to the cost factors
that make all the difference in the
commodity business of mining.
An engineering graduate of the Na­
tional Autonomous University of
Mexico, Muhech has seen boom-andbust cycles come and go over a 45-year
career at Grupo Mexico. But today’s
interview and its focus on the turn­
key US$580 million electric power
plant that Siemens has been building
for his company near its La Caridad
copper mine in northern Mexico has
him especially animated.
40 Living Energy · No. 10 | May 2014
His enthusiasm stems in no small part
from the 40 percent cost savings in
electricity that the combined cycle,
500-megawatt plant will deliver once
fully operational. The facility near
Nacozari in northwestern Sonora
state will be the largest end userowned electric power plant in Mexico
and provide Grupo Mexico with a
crucial competitive advantage in the
global copper market.
u
An Expert with 40 Years Experience
Ing. Vidal Muhech Dip, General Director of
Engineering and Construction for Grupo Mexico,
has been with the company since 1969.
“We intend to keep growing
and the Siemens plants
will allow us to do so.”
Vidal Muhech Dip
Living Energy · No. 10 | May 2014 41
Power for Mining
Power for Mining
Living Energy: Grupo Mexico is making a substantial investment in the new electric
power plant at La Caridad. What is its strategic importance for the company?
Vidal Muhech Dip: Mining is an energy-intensive business and we thought we could
take advantage of the closeness of Nacozari to the United States, which these days has
the cheapest natural gas in the world. Using Siemens’ combined cycle technology, we
thought we could generate our own electricity at a much lower cost than what is available through the national power utility.
Now, with half of the plant finished and delivering 250 megawatts, and with the other
half in a testing phase, I can say that we are highly satisfied. Once it’s complete, we
­expect the power plant will allow us to reduce the cost of producing a pound of copper
to 89 cents from the previous 93 cents, which is a big cost advantage.
LE: Why is the power plant’s location in northern Sonora state a
key factor?
VMD: The closeness to the La Caridad mine and also to our ­Buenavista
de Cobre mine in Cananea, which is also in Sonora state, means lower
transmission costs. The size of the investment in the power plant built
with Siemens technology is relatively common for Grupo Mexico. But it
will allow for ­expansion. For example, we are investing a total US$3.2
billion in the ­expansion of the Buenavista mine in the coming years.
“The new plant will
supply electricity not
just to the smelter that
produces copper at La
Caridad, but also to
the Buenavista mine
and a lime plant near
Agua Prieta.”
Luis Felipe Garrido, La Caridad
plant manager for Grupo Mexico
The high-voltage switchyard at La Caridad I and II, from where the power flows to the nearby mines.
Recently, Living Energy visited the new
Grupo Mexico electric power plant
built by Siemens at the La Caridad
mine site as workers there were put­
ting finishing touches on the second
of two combined cycle power genera­
tion systems. “Once f­ ully operational
in May, the plant will make the world’s
lowest-cost copper producer even
more efficient,” says Luis Felipe
­Garrido, the Grupo Mexico project
manager who is overseeing the new
power plant’s integration into the
mining complex.
“Mexican law passed a decade ago
lets companies build power plants
for their own use,” says Garrido,
adding that the new Siemens facility
42 Living Energy · No. 10 | May 2014
will ­enable the company to achieve
important economies of scale. The
new installation will supply electricity
to several mines, not just the smelter
that produces copper at La Caridad,
but also the Buenavista mine in
Cananea and to a sulfur mine and a
lime plant near Agua Prieta.
Garrido adds that the power plant
fits into Grupo Mexico’s goal of be­
ing an environmentally friendly
miner. As a combined cycle plant,
the installation produces about two
thirds of its electricity from a tur­
bine fueled by natural gas. The rest
comes from exhaust heat which
then heats water to create vapor that
­powers a second steam turbine.
By capturing the heat, 33 percent
­additional electricity can be created.
Grupo Mexico’s US$600 million in
the power plant is unusual among
big companies that are the end users
in that most leave it for third parties
to finance the power generation fa­
cilities, then simply sign long-term
commitments to use the energy.
Grupo Mexico is betting on the eco­
nomics of producing their own ener­
gy and consuming it. ­Garrido says
he doesn’t know of many other com­
panies with that kind of commit­
ment. Back in Mexico City, Ing. Vidal
Muhech Dip explains the ­strategy
­behind such a decision.
u
Living Energy · No. 10 | May 2014 43
Power for Mining
Mexico
The La Caridad Mining Complex in Numbers
Ore extracted from the mine comes
The mining complex contains
9.97
with a copper grade of over
0.30%.
megatonnes of ­proven
and probable reserves of copper.
La Caridad uses state-of-the-art computer monitoring systems
at the concentrator, the crushing plant and the flotation circuit
to optimize operations. The concentrator has a current
­capacity of
90,000 tonnes of ore per day.
Mineral Extraction per Year
Copper
125,717 MT
Copper has been mined
Gold
0.12 MT
Silver
59.26 MT
Molybdenum
9,796 MT
and smelted in northeastern Sonora for over
100 years. Mining has
ushered in the industrial
era in this region.
The molybdenum recovery plant has a capacity of
of copper-­molybdenum concentrates. The lime plant has a capacity of
340
tonnes of finished
product per day. 2,000
tonnes per day
1,074 employees produced
113.7
kilotonnes
of copper in 2011.
La Caridad is located in the northeastern hills of Sonora state in
­Mexico. The deposit is situated near the crest of the Sierra Juriquipa,
about 23 kilometers southeast of the town of Nacozari. Retrieved on March 19, 2014, at http://www.gmexico.com/business-lines/scc.php and http://mexicominingreview.com/mines/mine_17.html
44 Living Energy · No. 10 | May 2014
La Caridad mine is located in northeastern Sonora, about 23 kilometers from the town of Nacozari. The complex includes an open-pit
mine containing copper, molybdenum, silver and gold.
Living Energy · No. 10 | May 2014 45
Power for Mining
Power for Mining
LE: You compete on a global scale against miners in the USA, Chile,
­Australia and elsewhere. How do you measure success?
VMD: Mining is a commodities business. There is no difference in the end
product as long as quality standards are met. The competition comes in
­controlling production costs. Grupo Mexico’s electric power plant built with
Siemens state-of-the-art technology will not just help lower our costs but
make expansion at La Caridad and Buenavista more feasible.
LE: Why did you select Siemens to build the power plant?
VMD: We conducted a tender and bids were evaluated on different ­levels,
including the technology part, lowest cost, heat rate, even the impact
of free trade agreements. Siemens was selected in part because their
turbines are among the most technologically advanced and also because
they gave us a turnkey proposal, which was another comfort ­factor. Our
business is in mining. Power generation is not our specialty.
Out of the mine, and off to the customers: At the smeltering facility in the Sonora mountains near Nacozari, the red-hot copper is
worked into high-quality wire and plates.
46 Living Energy · No. 10 | May 2014
Although rocky and forbidding, the
area in which the new Grupo Mexico
electricity generation plant built
with Siemens technology and
La ­Caridad mine are situated is one
that is rich in indigenous tradition
and where discussions of power
­often refer to the spiritual variety.
Three “etnias,” or indigenous groups
live in and around Nacozari, says
­Osvaldo Giron, the power plant’s
­human resources manager. He is an
“adopted brother” of the Yaqui com­
munity, which is one of them.
He describes people here as rich not
necessarily in possessions, but in
their style of life, their philosophy –
“indomitable, unbreakable people,”
in his words. The Yaquis were never
conquered and were among Pancho
Villa’s toughest soldiers during the
Mexican Revolution. Land and water
are ­sacred to them. For Giron, this
reinforces the sense of respect and
responsibility that he and his comin­
ers have for natural resources. He
explains that people here see mining
as God giving up something he made
with his own hands in exchange for
people’s survival.
Osvaldo Giron is a native Sonoran
who rose from humble origins by
dint of hard work and study to a top
management level job at the mining
complex. To count such loyal people
with appreciation for the land and its
history among Grupo Mexico’s work
force is something General Manager
Vidal Muhech Dip is proud of.
u
Grupo Mexico …
… is the world’s fifth-largest copper miner.
… has more than US$10 billion in annual ­revenue.
… will own Mexico’s and Latin
America’s largest proprietary electric p
­ ower plant, the
new
500-MW cogenera-
tion ­facility at La Caridad
… will save approximately
40 percent
On the current electricity
prices.
mine that Siemens built.
… oversees the largest copper reserves worldwide. With
their fully integrated operations, they are the leader in lowcost production.
… also owns
74 percent
of Ferromex, Mexico’s
largest railroad ­network.
… will invest US$3.2
­billion to double the output
of Buenavista de Cobre mine
near Cananea, ­Sonora state.
Living Energy · No. 10 | May 2014 47
Power for Mining
Power for Mining
LE: The area surrounding the La Caridad mine is barren and arid. It’s hard
to believe that such terrain can provide economic benefits.
VMD: Mining has played an important role in Mexico’s economy for 400 years,
since Spanish colonial times. And it continues to be important, representing
5 ­percent of the country’s economic output. Above all, mining is an activity that
has ­given economic development to cities and small towns where there isn’t
much of anything else, in places where there are few other sources of work.
LE: Copper prices boomed over the last ten years and then recently started to fall.
What are the macroeconomic reasons for this?
VMD: We are living in a price cycle pushed by huge demand in China and to a lesser
­extent India. Lately prices have fallen because demand has fallen, but they will never
­return to levels of ten years ago, partly because the cost of producing copper has risen.
As the main source of employment in
northwest Sonora state, mining is a
bellwether industry for the region’s
economy. The construction of the
Grupo Mexico power plant built by
Siemens and the e
­ xpansions of exist­
ing mines that it will facilitate are
welcome news to local Sonorans since
this means the possibility of employ­
ment at a moment of little job growth
in the country.
Very happy with her job is Mayra
Santos, a 25-year-old chemical engi­
neer. She says she is not only prac­
ticing what she was trained to do, but
Grupo Mexico supports the commu­
nity and La Caridad is close to her
hometown in Nacozari. Santos has
a crucial role at the power plant: She
monitors levels of contaminants such
as silica, iron and phosphates left
­after the water filtration process to
guard against incrustations in the
steam turbine.
Before returning to her spectropho­
tometer, an instrument that detects
minute but rogue levels of minerals
by their colors, Santos says working
at this enormous project makes her
proud, as does the fact that she beat
out five other job applicants for the
position. After all, she lives in a city
that is growing fast. In her view,
­Grupo Mexico not only generates
Capturing the Treasure in the Desert
View Mexico City-based director Michael Vetter’s film about the two combined
cycle plants that power Grupo Mexico’s mines in the mystic Sonora mountains.
siemens.com/living-energy/
la-caridad
Living Energy at
work but helps build streets and
schools. Its presence means more
than jobs. Ing. Vidal Muhech Dip
at Grupo ­Mexico’s headquarters is
well aware of this fact and is intent
on helping to grow not only the
­company, but Mexico’s economy. p
A former foreign correspondent for the
Los ­Angeles Times, Chris Kraul is a freelance
­business, science and technology writer based
in Bogotá, Columbia.
LE: What are Grupo Mexico’s challenges ahead and do you see Siemens ­helping
the company achieve its goals?
Combined power cycle plants La Caridad I and II, side by side in the Sonora hills in Mexico.
“This project makes me proud, as
Grupo Mexico not only generates work
but helps build streets and schools.
Its presence means more than jobs.”
Mayra Santos, chemical engineer
48 Living Energy · No. 10 | May 2014
VMD: Mexican President Enrique Peña Nieto and Congress recently pushed through
an energy reform law that not only opens up the Mexican oil and gas ­industry to
foreign investment but also may allow private companies like ours to enter the electricity generation business. There is more liberty for private companies and that’s
what we talked to Siemens about. At the same time we are committed to protecting
the environment. Pending on the secondary laws, the energy reform presents a
growth opportunity in the energy sector, in both, conventional and nonconventional
energy sources, such as wind and solar amongst others.
LE: Any other projects on the horizon?
VMD: We intend to keep growing, which our new plant built by Siemens
will ­allow us to do. Our Buenavista mine in Sonora state will expand
from 180,000 annual tonnes of copper to 460,000 annual tonnes by the
end of 2015. La Caridad mine currently processes 150,000 tonnes of
copper per year. All together, the operations of the company in Mexico,
the USA and Peru add up to 1,100,000 annual tonnes.
Living Energy · No. 10 | May 2014 49