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By Shihoko Goto — Exclusive to Copper Investing News
There is a good reason why the world’s biggest publicly-traded copper mining group is based in the heart of Arizona. The state is rich in the red metal, and the commodities market plays a crucial role in the region’s economy. But for Arizona to retain its prominent position in the industry, and indeed for the United States to remain a significant producer of the metal, the way that state legislature and national regulations move forward on land and mining rights will be critical.
There is no doubt that copper mining is a big business in Arizona, supporting over 62,000 jobs and contributing about $7.5 billion to the state’s GDP, according to PricewaterhouseCoopers. With over 60 percent of all copper produced in the US coming from the Grand Canyon state, it is no surprise that Freeport-McMoRan (NYSE:FCX) is headquartered in the state capital of Phoenix. Moreover, there have been calls from legislators and the private sector alike to tap further into the state’s natural resources, especially amid a growing rallying cry to make the nation as a whole less dependent on foreign imports.
“We can do more to meet our domestic mineral needs and provide a reliable chain of supply to American manufacturers and technology providers. As emerging economies embrace new technologies and build infrastructure, the demand for minerals, especially copper, continues to increase here and abroad,” stated Arizona Republican Senator Al Melvin. “Overreliance on imports, coupled with flat production throughout the years, puts our economy, national security and ability to Advertisement innovate at an increased risk of supply disruptions.”
Land exchange and conservation act impact copper mining
Mining giants are certainly eager to dig more, but they continue to face opposition from labor and environmental groups alike. Rio Tinto (NYSE:RIO) and BHP Billiton (NYSE:BHP), for instance, have a significant stake in the state; their joint venture, Resolution Copper Mining, is looking to operate an underground copper mine that would be the biggest copper mine in the US by 2021. The project depends in part on the approval of a land exchange in which 5,300 acres near Superior, Arizona would be given to the government in exchange for 2,400 acres of land with copper. The bill, HR 1904, was approved by the House last autumn, but it is still awaiting Senate approval.
There are, however, a number of concerns being raised by local communities, not least of which is the environmental impact of the project.
“I recently visited the site with Sen. (John) McCain and I and know that it is an important opportunity,” said Secretary of the Interior Ken Salazar before the House Committee on Natural Resources last month. “It also is a place where there are very significant tribal concerns that need to be addressed, and also a place where water issues in that area are very important to also address.”
Salazar is supporting a bill that would require environmental analysis prior to a land exchange, while HR 1904 does not require such analysis.
Resolution Copper is not alone in attracting considerable support as well as criticism. Rosemont Copper is another controversial mine in Arizona that is looking for approval to move forward. Located in the Coronado National Forest, environmentalists have protested about the damaging effects mining would have on the region, while the company has continuously argued that the operations would not only be environmentally sensitive, but would create much-needed jobs and bolster the state’s economy.
While efforts by Resolution and Rosemont have grabbed much of Arizona’s interest in copper mining, there are already a number of major players with significant operations in the state, most notably Freeport-McMoRan with five sites in Arizona, namely the Morenci, Bagdad, Sierrita, Miami, and Safford mines. Vancouver-based Mercator Minerals (TSX:ML) operates its flagship Mineral Park mine where it is expecting to increase copper output in coming years. As for Asarco, it operates the Mission, Ray, and Silver Bell mines in the state.
Copper mining in the US at risk
How the US Congress moves forward in mining rights will be key in determining the future of the copper mining industry not only in Arizona, but nationwide. Alaska’s Republican Senator Lisa Murkowski, for instance, has repeatedly argued that unless the country makes it quicker and easier for companies to be granted mining permits, the US will lose out to Canada and other countries where mine operators are welcomed with open arms.
For junior miners, there will be considerably more opportunities once a legislative breakthrough in land exchange rules is reached both in Arizona and across the US.
Securities Disclosure: I, Shihoko Goto, hold no direct investment interest in any company mentioned in this article.
Arizona’s Copper Mining Challenges originally posted on copperinvestingnews.com
4 Comments
RU BRAINWASHED?
Don’t think for one second this article is true. Canada has very stringent EPA rules and regulations. The US wants companies to mine here in a big way but not willing to let some bootleggers come in, take what they need and leave a giant mess for the tax payers to clean up. A perfect example is the Quicksilver mines in San Jose and Clear Creek where years ago they mined for mercury and now it is a “Super Fund” clean up job. It is so easy to listen to the Rush Numbskull and Faux News and develop an opinion against govt. regulations. WAKE UP!
Maekguess
After the way BHP handled the San Manuel mine I wouldn’t want them operating in Arizona.
They could care less how they messed up the enviornment and the lives of the ex-employees.
I am all for the copper mines starting up again but wouldn’t trust anything BHP is connected too. (Unless they clean up the mess they made at San Manuel.)
Guest
“US wants companies to mine here in a big way but not willing to let some bootleggers come in, take what they need and leave a giant mess for the tax payers to clean up”
If the US wanted companies to mine here in a big way they would not be shackling the permitting process so that it takes 10 years to permit a project here that can go forward in South America, for example, in 1. We have an engineering business that does a great deal of work for mining companies, and have seen multiple millions of dollars in projects (by American companies, NOT “bootleggers”) flee the country due to the morass of regulations and prohibitions our government throws in the way of resource development. I know for a fact that this article is indeed accurate. Pretending that we are being responsible stewards of the environment by forcing these projects to go elsewhere, where they WILL be carried forward with less oversight (drill, Brazil, drill) is the height of NIMBYpolitically expedient hypocrisy designed simply to protect politician’s own backsides and not to protect our planet.
Awake
The manner in which the US Government “participates” by constant political interference in the development of any resource in the US is simply “Legalize criminal activity ” as no decision will ever be made by Government until the body of evidence is overwhelming such that the decision is made for them. There are so many projects stalled by the EPA and other government agencies it is criminal how the US is becoming dependent on outside natural resource imports , not to mention the export of the US wealth. Copper doesn’ grow on trees it has to be mined in a responsible way, not politically “mined” ready to explode.