Resolution Copper Mine on Hold
Developers of a massive copper mine near Superior are putting the project on hold and laying off hundreds of workers after becoming frustrated by years of political wrangling over a land swap.
Resolution Copper Mining Co. officials said Friday that after seven years of stalled efforts to get the federal land needed to make the mine viable, they aren’t sure of getting congressional approval to proceed and are unwilling to pump more money into the project unless they do.
The company, which has spent $950million developing the mine, has been seeking a land exchange since 2005. Eleven versions of a land-exchange bill have been introduced in Congress, and last year the House approved the deal in a bill introduced by Rep. Paul Gosar, R-Ariz., but the measure never got a hearing in the Senate.
Resolution Copper’s plans to develop a 7,000-foot-deep mine near Superior has been criticized by environmental groups and the Inter Tribal Council of Arizona, who say it could threaten the region’s water supply and harm sacred tribal grounds.
The company, which announced it will lay off 400 of its 500 workers at the site in the coming months, said the project still needs $5billion of investment. But Resolution Copper’s backers aren’t willing to push too far ahead on the development of the site without political clearance to eventually begin mining, said Andrew Taplin, the project director.
Company officials denied speculation that the layoff announcements were being used as leverage to force lawmakers into action. But Republican lawmakers pledged Friday to continue pushing hard to make the swap happen and green-light a project that would create thousands of jobs and inject billions of dollars into Arizona’s economy.
If the Senate takes no action during the current lame-duck session, Gosar said he’ll introduce the bill as soon as the 2013 session begins.
“We’ve been pushing every single button,” Gosar said. “I’m staying this weekend (to work on it). …We’re trying every single which way we can.”
The bill’s failure has prompted members of Arizona’s delegation to point fingers at each other along party lines.
Gosar singled out Democratic Reps. Ed Pastor and Raúl Grijalva.
“You should ask (the congressmen) if they regret their votes” against the bill, Gosar said, now that jobs are being lost. “I find it insulting, absolutely insulting that people would not work on this in a proper fashion.”
Grijalva in particular worked to block the mine when Democrats held the House majority, citing environmental, tribal and economic concerns. When Republicans took control in 2010, Gosar was able to move the legislation through.
Grijalva was not apologetic on Friday, accusing Gosar and Republican U.S. Sens. John McCain and Jon Kyl of wanting to allow the mining companies to run roughshod.
“It’s that kind of blind adherence to ‘Let’s do whatever it takes to turn over our public lands for extraction and not worry about consequences’ that is very, very dangerous,” Grijalva said. “I think Mr. Gosar should probably be relieved that he doesn’t have to explain why he is … giving away our precious resources without any royalties to a foreign company.”
In the Senate, Republicans blamed Sen. Jeff Bingaman, D-N.M., the chairman of the Energy and Natural Resources Committee, for holding up the bill.
But Bill Wicker, Bingaman’s committee spokesman, said the current bill removed key provisions that had been worked out between Bingaman and McCain in the last Congress.
It eliminated a requirement that the project undergo two federal environmental-impact statement reviews — one for the mine and one for the land exchange. The new bill required only one review, on the mine’s impact.
Gosar’s bill also eliminated a Bingaman provision that would have allowed the secretary of Agriculture to stop the project if he believed it was not in the public interest.
Arizona lawmakers eager to blame the committee for the stalled project and layoffs need to know “that there was a deal in hand,” Wicker said.
“We made it clear to the Arizonans that we are ready, willing and able to meet with them to talk about the legislation,” he said. “There has not been any desire expressed (by the Arizona senators) to do that. … No one has ever asked us to hold a markup on the bill or asked that the committee give it further consideration after we had the hearing in February.”
McCain spokesman Brian Rogers said the suggestion McCain hasn’t talked with Bingaman or asked for action is patently untrue.
Staffers have dedicated hundreds of hours to finding solutions, he said, and McCain has personally made the rounds to talk with the power players.
“This is one of Senator McCain’s top Arizona priorities,” Rogers said. “This thing has been debated and negotiated down to the periods and commas.”
Both sides struck optimistic tones for a deal in the final weeks of the 112th Congress.
“In my experience, the Senate is an infinitely flexible place,” Wicker said. “Something could happen.”
Gosar urged the Senate to find a path forward and finish the job.
“We have never been closer to seeing this important bipartisan jobs initiative enacted,” he said. “Enough rhetoric. Arizonans need results. We cannot waste another moment.”
Rogers said McCain will pursue all options to move the bill before the end of the year, including working directly with Senate leadership and offering the bill as an amendment.
McCain said the bill will not pass without the “the cooperation of the entire Arizona congressional delegation.”
The land swap would give the mine about 2,400 acres in the Oak Flat area of the Tonto National Forest. In turn, the mine would deed more than 5,000 acres of environmentally sensitive land throughout Arizona to the federal government.
Officials for the Resolution Copper project, a joint venture between two major international mining companies, U.K.-based Rio Tinto and Australia’s BHP-Billiton, have said it could create 3,700 mining jobs and 3,000 construction jobs and generate nearly $20billion in tax revenue to federal, state and local governments. It could contribute $46.4billion to Arizona over the course of its projected 66-year lifetime, according to economic-impact studies.
More cuts at company
The Resolution cuts follow another $7billion in global cost-cutting measures over the next two years announced by Rio Tinto on Thursday.
The company, which mines copper, gold, iron and uranium on six continents, said it was making cutbacks in the face of uncertain global economics but would continue to invest in sound projects.
The annual budget at the Resolution project will fall to $50million next year from $200million in 2012. About 100 to 150 jobs will remain at the site as the project is put on hold, but the company will focus on politics and permitting, rather than physical development of the mine.
“To justify further development, we need more certainty around legislative and regulatory activity affecting Resolution Copper,” Taplin said. “Specifically, approval of the land exchange we’ve been seeking since 2005 constitutes the critical path forward. Our efforts at (Resolution Copper) will be directed toward working to obtain the certainty we need.”
The land-swap plan previously ran into trouble when former U.S. Rep. Rick Renzi, R-Ariz., got involved. He was indicted on federal corruption charges and did not seek re-election in 2008 after the government alleged he organized a scheme involving the land exchange.
He was accused of blocking the land swap unless it included a parcel owned by a business associate, and assuring passage of the deal if his friend’s land was included.
Authorities said Resolution Copper refused the deal. After news of the investigation leaked to the media, Renzi dropped his legislation, and the land exchange fell through.
The stalled project leaves the town, with a declining population of 2,800, worried about its future.
About 175 people will lose their jobs by year’s end, with the other 225 to be cut by the end of March, according to the company.
Taplin said that when the seven drilling rigs that are operating now finish the holes they are boring, they will cease operations. All are expected to be done by late March.
“This is a very frightening thing that is happening now,” said Sue Anderson, who owns 20 rental properties in Superior, at least six of which are rented to mine employees. “This town has been coming a long way and doing some great things. It is a blow to us.”
She said she is hopeful a deal can be struck in Congress now that the stakes are so clear.
Observers like Anderson immediately suggested the layoffs might prompt Congress to act on the land deal, but company officials said that was not their strategy.
“Certainly not,” Taplin said, adding that such a political move would be likely to cause more backlash than support.
Bruce Richardson, Resolution Copper manager of communications, said only cynics would suggest the company was using the layoffs to prompt congressional action.
“Cynics haven’t invested $1billion in the project,” he said. “Cynics didn’t have to go to the town and tell people they are losing their jobs today.”
The developers warned senators in February that they risked losing funding from Rio Tinto if Congress did not approve the project by year’s end.
Taplin said the work stoppage is not the most economical way to proceed, but the company’s hand was forced because regulatory approval is not moving as fast as the rest of the project.
If the land swap and environmental permitting outlook is better in a year, it’s possible the company will increase the budget for the project again and work could resume, he said.
“The goal is to pick back up our tools and keep working on it,” he said.
Town council member Gilbert Aguilar, 56, who has lived in Superior his whole life working for a natural-gas company, was in a briefing with Resolution officials when they told town officials of their plans on Friday.
“This is really hard on the town,” he said. “Being a small community, it really hurts. These people live here. They eat here. They buy some groceries here.”
He said about 65 of the mine’s employees live in Superior, with most of the rest in nearby communities.
“They told us that Rio Tinto is very large and they could send people to different mining places or different areas to see if they can get jobs,” he said. “They want to keep these people because they are hard workers. That means relocating and all that, which is hard. But I’m sure most people will do it for a job.”
Rio Tinto has metal mines in Nevada and Utah, as well as coal and other mines throughout the West.
The Superior mine is projected to produce more than one-fourth the amount of copper produced in the United States today by all the other mines combined and would be the largest annual copper-producing project in the nation if developed.
The largest mine in the state now is Freeport-McMoRan Copper and Gold Inc.’s Morenci mine, which produced 614million pounds of copper in 2011.
The Resolution project is estimated to be capable of producing more than 1billion pounds a year, which is 1.6times the production of Morenci.
The Resolution project is thought to be the largest copper deposit in the nation, but another copper deposit in Alaska under review could top it or be comparable in size, said Nyal Niemuth, Phoenix branch manager for the Arizona Geological Survey.
“This will certainly be a huge loss of jobs to the Phoenix area with companies that would have acted as suppliers (to the mine),” he said. “It is a terrible blow. The U.S. is a net importer of copper, and this production would have about taken care of U.S. demand (combined with production from other mines).”
He said the announcement isn’t reflective of a slowdown in the state, pointing to new sales agreements for copper from other mines, the Ray and Pinto Valley mines’ plans for expansions and other projects. “There still are some projects going forward,” he said.
By Ryan Randazzo and Rebekah L. Sanders The Republic | azcentral.com