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It already owns one of the world's biggest copper mines at Bingham Canyon in Utah, but with operations there sidelined as a result of a massive wall collapse earlier this year, Rio Tinto (NYSE: RIO ) is developing plans for what could become the largest copper mine in the U.S., the Resolution Copper project in Superior, Ariz.
But don't expect it to begin bringing any of the red metal to the surface anytime soon. It's still in the pre-feasibility stage, and there's a lengthy, arduous path to follow. According to a report in USA Today yesterday, Rio Tinto will submit a plan to the U.S. Forest Service this Friday, outlining how it plans to mine the copper ore, dispose of the tailings and other waste, and bring water to the site.
That's just the first step, however, one that will launch a six- to nine-month review process. Afterwards, a multi-year environmental review will occur, a process that entails meeting and satisfying numerous government agencies as well as a public comment period and the securing of more than 50 environmental and operating permits. But even before any of that happens, it still needs to have Congress approve a federal land swap to give the miner rights to the land -- though that could be considered by committee as early as this week. The earliest production could begin would be around 2020.
At full production, Resolution Copper would be massive. It's estimated it could produce more than 1 billion pounds of copper per year, or enough to satisfy more than 25% of the U.S.'s current copper needs, and have an extraordinary 40-year life span.
Jointly owned with BHP Billiton, which has a 45% stake in the project, Rio Tinto estimates the mine will employ 1,400 direct workers and create another 2,300 indirect jobs, generating wages of $220 million annually and a total of $61.4 billion worth of economic benefits over the mine's life. And since the government always has to get its cut, local, state, and federal governments will receive some $20 billion in tax revenues.
Lest you think Resolution is a fait accompli, there is significant opposition already to the project from the usual suspects, including environmental groups, which say it will harm recreation and rock-climbing areas while threatening water quality over much of the state, and (more importantly) the San Carlos Apache Tribe because it will damage sacred tribal land.
If past is any prologue, that could be a major sticking point, as miners all around the globe have run into a wall of opposition from indigenous peoples who've protested the desecration of religious and ceremonial lands these projects would entail .
Barrick Gold (NYSE: ABX ) was stymied at its potentially lucrative Pascua-Lama gold mine in Chile following opposition by local tribes; Southern Copper (NYSE: SCCO ) ran aground in Peru at its proposed $1 billion Tia Maria project in Arequipa after violent clashes with indigenous peoples; Cliffs Natural Resources (NYSE: CLF ) saw its chromite mine in Ontario run off the rails after its proposed ore-haul road crashed and an alternative railway system met with opposition; and just last week Taseko Mines (NYSEMKT: TGB ) saw its New Prosperity project in British Columbia wrecked in part because of the impact the project would have on the cultural and religious practices of the aboriginal peoples.
The San Carlos Apache Tribe is the 10th largest reservation in land area, and is located in east central Arizona, covering more than 1.8 million acres from the Sonoran desert to the alpine forest. They say that not only will there not be the economic benefits Rio Tinto projects, but Resolution Copper would destroy culturally protected and environmentally sensitive land within the Tonto National Forest.
The Apache Leap, Gaan Canyon, and Oak Flat areas of Arizona were originally protected from development, but the land swap would alter that. The Apaches use the area for cultural and religious purposes and would be prohibited from doing so should this go through. They also contend the Apache Leap monument -- where Apache warriors leapt to their death rather than be captured by U.S. calvary -- would be damaged by the project.
As miners elsewhere are finding, not even the prospect of sharing the prospective wealth of the mine's output with the locals -- what some deem as trying to buy them off -- results in much advancement for these projects.
Rio Tinto may see Resolution Copper as an opportunity to expand during what is sure to be the coming copper boom, but investors shouldn't hold their breath that it will actually happen.
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