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Other employee benefits
12 Months Ended
Dec. 31, 2022
Other Employee Benefits [Abstract]  
Other employee benefits [Text Block]

22. Other employee benefits

Hudbay sponsors both other long-term employee benefit plans and non-pension post-employment benefits plans and uses a December 31 measurement date. These obligations relate mainly to commitments for post-retirement health benefits. Information about Hudbay's post-employment and other long-term employee benefits is as follows:

Movements in the present value of the defined benefit obligation in the current and previous years were:

    Year ended  
    Dec. 31, 2022     Dec. 31, 2021  
Opening defined benefit obligation $ 128,843   $ 129,616  
Current service cost1   4,656     3,861  
Past service cost   -     134  
Curtailment (note 6e)   (1,801 )   -  
Interest cost   3,940     3,531  
Attribution period changes (note 6e)   (3,179 )   -  
Effects of movements in exchange rates   (6,074 )   639  
Remeasurement actuarial losses/(gains):            
Arising from changes in demographic assumptions   -     2,601  
Arising from changes in financial assumptions   (36,058 )   (7,309 )
Arising from experience adjustments   (516 )   (1,034 )
Benefits paid   (2,595 )   (3,196 )
Closing defined benefit obligation $ 87,216   $ 128,843  

1 Includes remeasurement of other long term employee benefits

The defined benefit obligation closing balance, by group member, is as follows:

    Dec. 31, 2022     Dec. 31, 2021  
Active members $ 58,482   $ 57,775  
Inactive members   28,734     71,068  
Closing defined benefit obligation $ 87,216   $ 128,843  

Movements in the fair value of defined benefit amounts in the current and previous years were as follows:

    Dec. 31, 2022     Dec. 31, 2021  
Employer contributions $ 2,595   $ 3,196  
Benefits paid   (2,595 )   (3,196 )
Closing fair value of assets $ -   $ -  

The non-pension employee benefit plan obligations are unfunded.

Reconciliation of assets and liabilities recognized in the consolidated balance sheets:

    Dec. 31, 2022     Dec. 31, 2021  
Unfunded benefit obligation $ 87,216   $ 128,843  
Vacation accrual and other - non-current   2,607     3,275  
Net liability $ 89,823   $ 132,118  

Reflected in the consolidated balance sheets as follows:

    Dec. 31, 2022     Dec. 31, 2021  
Other employee benefits liability - current (note 14) $ 3,483   $ 3,530  
Other employee benefits liability - non-current   86,340     128,588  
Net liability $ 89,823   $ 132,118  

Other employee future benefit expense includes the following:

    Dec. 31, 2022     Dec. 31, 2021  
Current service cost 1 $ 2,855   $ 3,995  
Net interest cost   3,940     3,531  
Components recognized in consolidated income statements $ 6,795   $ 7,526  
   
1 Includes remeasurement of other long term employee benefit and curtailment  
    Dec. 31, 2022     Dec. 31, 2021  
Remeasurement on the net defined benefit liability:            
Actuarial losses arising from changes in demographic assumptions $ -   $ 2,601  
Actuarial gains arising from changes in financial assumptions   (36,058 )   (7,309 )
Actuarial gains arising from changes experience adjustments   (516 )   (1,034 )
Components recognized in statements of comprehensive income $ (36,574 ) $ (5,742 )
             
Total other employee future benefit cost $ 29,779   $ 1,784  

Other employee benefit amounts recognized include those directly related to production of inventory; such amounts are recognized initially as costs of inventory and are expensed in the consolidated income statements within cost of sales upon sale of the inventory.

  Dec. 31, 2022 Dec. 31, 2021
Defined benefit cost:    
Discount rate 3.30% 2.76%
Initial weighted average health care trend rate 6.00% 5.66%
Ultimate weighted average health care trend rate 4.00% 4.00%
Average longevity at retirement age for current pensioners (years)1 :    
Males 20.4    20.3   
Females 23.7    23.7   
 
  Dec. 31, 2022 Dec. 31, 2021
Defined benefit obligation:    
Discount rate 5.27% 3.30%
Initial weighted average health care trend rate 5.92% 6.00%
Ultimate weighted average health care trend rate 4.00% 4.00%
Average longevity at retirement age for current pensioners (years)1 :    
Males 20.4    20.4   
Females 23.8    23.7   
Average longevity at retirement age for current employees (future pensioners) (years)1 :    
Males 22.3    22.3   
Females 25.5    25.4   

1 CPM2014 Priv with CPM-B projection scale

Hudbay reviews the assumptions used to measure other employee benefit costs (including the discount rate) on an annual basis.

The other employee benefit costs typically expose Hudbay to actuarial risks such as: interest rate risk, health care cost inflation risk and longevity risk.

Interest risk A decrease in the bond interest rate will increase the plan liabilities.
Health care cost inflation risk The majority of the plan's benefit obligations are linked to health care cost inflation and higher inflation will lead to higher liabilities.
Longevity risk The majority of the plans' benefit liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plans' liabilities. This is particularly significant for benefits subject to health care cost inflation where increases in inflation result in higher sensitivity to changes in life expectancy.

 

The sensitivity analyses below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding other assumptions constant:

- If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by $6,070 (increase by $6,843).

- If the health care cost assumption increases (decreases) by 1%, the defined benefit obligation would increase by $13,940 (decrease by $11,188).

- If the life expectancy increases (decreases) by one year for both men and women, the defined benefit obligations would increase by $2,888 (decrease by $2,885).

The average duration of the non-pension post-employment obligation at December 31, 2022 is 15.0 years (2021: 18.6 years).

This number can be broken down as follows:

- Active members: 21.9 years (2021: 25.4 years)

- Inactive members: 11.6 years (2021: 13.2 years)