Letter from the CEO

Meeting challenges to strengthen our vision

At Peñoles, we produce metals and chemicals that are essential to the well-being of society. Because our commitment to society and the environment inspires what we do and how we do it, we have made it our mission to assist in transitioning to a low-carbon emissions economy.

Our purpose is to generate opportunities and well-being by sustainably supplying essential resources
Our precious and industrial metals value chain meets the supply criteria of the London Bullion Market Association (LBMA) and the London Metal Exchange (LME), and we are committed to the principles of the UN Global Compact and its Sustainable Development Goals (SDG). In Mexico, we have been awarded the Ethics and Values prize, and we lead the rankings in corporate ethics.

What do we do?
Create opportunities and well-being
COVID-19
Since the start of the pandemic, we have prioritized the welfare of our people, solidarity with our communities and cooperation with health authorities. In 2020, Peñoles’ leadership was crucial in working with authorities to develop the Mexican protocol to prevent contagion in the mining and metallurgical industry. Today we continue to reinforce preventive measures with a focus on promoting and bringing vaccines closer to our employees and communities.

In recognition of the measures we take to protect our people from COVID-19, our operations received the Health and Safety distinction from the Mexican Social Security Institute (IMSS).

Our health and safety programs are inspired by a zero-damage mentality and the pursuit of comprehensive wellness for our people.

Health, safety and comprehensive well-being
Peñoles aspires to operate a safe, accident- and illness-free work environment. Our health and safety programs are inspired by a zero-damage mentality and the pursuit of comprehensive wellness for our people. We took a big step forward to this end with a participative exercise in which we identified six paths of development: emotional, physical, intellectual, professional, cultural and transcendental.

Our occupational health strategy is based on prevention; we identify critical risks to health in order to eliminate, reduce and/or control them at their root. In Mexico and around the world, the COVID-19 pandemic exacerbated risks to mental health, which is why we have intensified our efforts to foster comprehensive wellness and emotional containment, and reducing work stress.

We deeply regret to report three fatal accidents in 2022. We know that we still have a long way to go to achieve our goal of eradicating this type of accidents.

In all of our operations, projects and explorations, we have taken a participative, evidence-based approach to identifying high-potential accident risks—those which may result in a fatal accident. We co-created critical controls to build trust and promote behaviors that reinforce these controls. With our people, we verify their onsite application and effectiveness, encouraging accountability and learning from high-potential incidents. We have prioritized the practice of visible leadership among our senior management and operating staff as agents of change; we also strengthened on-site supervision to ensure implementation of our safety strategy. For Peñoles, life and physical integrity of all our people is fundamental.

The metallurgical and chemical operations of Industrias Peñoles received the IMSS Safe and Healthy Workplace distinction.

Cultural evolution
To continue advancing, overcoming challenges and strengthening our vision, in 2022 we launched a cultural evolution strategy seeking accountability, co-creation and work in ecosystems.

Also during the year, we adopted a policy on equality and non-discrimination that mandates an equitable, inclusive, respectful work environment with equal opportunities for all, in which everyone feels valued and inspired to contribute to their fullest potential.

Committed to developing the talent of women in leadership positions, we began a mentoring program called Women for Women, whose aim is to empower their abilities and build and strengthen a network based on solidarity and empathy.

Our Laguna del Rey Center for Technical Studies (CETLAR) trains youth to work as specialized technicians, opening opportunities to future leaders in our communities.

Living the Community and Alliance for the Common Good
Peñoles is intent on building mutually beneficial relationships with neighboring communities, responsibly managing our impacts, addressing their concerns and involving ourselves in causes that are important to them.

We believe education is fundamental for social unity and the future of our communities. In 2022, we promoted 23 robotics teams supported by schoolteachers and company mentors. In these courses, students also learn values like cooperation. Last year they competed in the FIRST Robotics Laguna Regional Tournament, organized by Peñoles in Torreón, Coahuila, involving 586 young people, 150 teachers and company employees.

Our Laguna del Rey Center for Technical Studies (CETLAR) trains youth in communities to work as specialized technicians, opening opportunities to future leaders in our communities. Since the program began, 890 young people have graduated.

Health is fundamental for the prosperity of communities. In synergy with Fundación UNAM, we organized health weeks in mining communities, offering free medical checkups and care for neighbors.

In partnership with Alliance for the Common Good, we coordinated with authorities to set up the most successful vaccination center in La Laguna, and certainly one of the best examples of government-business collaboration during the pandemic. We also worked together with health authorities to organize vaccination days, benefiting our people and the communities of mining operations at Penmont and Ciénega, in addition to San Julián, where we benefited the Raramuri communities of the region. All together, these centers applied more than 347,000 vaccine doses.

Furthermore, in the regions where we operate, we prioritized local job opportunities and sourcing, while contributing to the development of regional capacities through the mining cluster associations to which we belong.

How do we do it?
By sustainably supplying essential resources

Climate change
Climate change is one of the greatest global challenges today, and it poses both risks and opportunities to Peñoles. Our strategy includes initiatives to reduce emissions and build capacities to plan climate change adaptation. Our efforts to reduce emissions pursue energy efficiency in all our processes, through measures like electricity from wind farms, cogeneration, the use of natural gas to replace diesel in trucks, and intelligent ventilation systems in our mines, among others. In 2022, we published our first progress report on climate change, following the principles of the Task Force on Climate-related Financial Disclosures (TCFD)

Water
Water is a finite resource, and given its socioeconomic, environmental and cultural value it is of utmost relevance to our stakeholders. Peñoles is committed to responsible water stewardship. We are voluntarily forming a governance framework based on best industry practices and deploying a strategy focused on care for water, which includes efficient management, cooperation with our stakeholders and transparent reporting of our performance.

In early 2023, our strategy for reusing wastewater from the city of Torreón, Coahuila was recognized with the Exceptional Enterprise Award, given by the Consejo Coordinador Empresarial, the Consejo de la Comunicación and the Instituto para el Fomento de la Calidad.

Tailings dams
We at Peñoles are committed to adopting best practices in governance and engineering to improve safety and reduce the risks of our tailings dam infrastructure, ultimately with the aim of causing zero damage to people and to the environment.

We have introduced a tailings dam management system with a lifecycle approach, based on the internationally recognized principles of: i) accountability, responsibility and competence; ii) resource planning and assignment; iii) risk management; iv) change management; v) emergency preparedness and response; and vi) inspection and assurance.

We strengthened our internal capacities by creating a team of tailings dam experts whose presence ensures sound governance, the enforcement of controls, reviews and independent inspections. The independent panel of experts is a crucial governance practice. We have also forged strategic partnerships with internationally recognized consultants who can serve now and in the future as engineers of record.

At Peñoles, we are convinced that doing the right thing to ensure sustainable operations will benefit present and future generations. Accordingly, we intend to continue on this path, meeting the challenges to strengthen our vision, inspired by our values of confidence, responsibility, respect, integrity and loyalty.

Rafael Rebollar González
Chief Executive Officer