Funding cut forces Resolution Copper to slow mine development in Arizona
Louisville, Kentucky (Platts)--3Dec2012/617 pm EST/2317 GMT
Congressional foot-dragging on a crucial land swap proposal has forced
Resolution Copper Mining to curtail all shaft development and drilling
activities for a new Arizona mine the company says would be the largest
copper producer in the US.
London-based Rio Tinto is slashing Resolution's 2013 budget to $50
million, a 75% cut, because Congress has not approved the company's proposed
exchange of 2,400 acres of US Forest Service land, containing what Resolution
says is one of the largest undeveloped copper resources in the world, for
more than 5,300 acres of conservation lands controlled by the company, a
Resolution official said Monday. Resolution is a subsidiary of Rio Tinto and
Australia's BHP Billiton.
Land swap legislation has been considered since 2005. "It did pass the
[House of Representatives] last October, and it has been in the Senate ever
since," said the official, who asked not to be identified. "So, we're still
hopeful that something will happen in the lame duck session right now."
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But with all the uncertainty, Rio Tinto decided not to wait and reduced
Resolution's budget from a previously proposed $200 million for 2013.
"They've elected to use some of the dollars we've had in the past and use
them elsewhere where there is more certainty," he said. "The money has been
set for 2013."
In a Friday statement, Andrew Taplin, the mine project director, said
"to justify further development, we need more certainty around legislative
and regulatory activity affecting Resolution Copper. Specifically, approval
of the land exchange we've been seeking since 2005 constitutes the critical
Taplin noted that 11 versions of the bill have been introduced in
Congress in the past seven years. The most recent, H.R. 1904, was passed by
the House of Representatives in 2011.
Arizona's two Republican senators, John McCain and Jon Kyl, are strong
supporters of the project and urging their Senate colleagues to consider the
legislation before the Senate adjourns later in December.
In the meantime, though, Resolution is suspending work on the No. 9
shaft at the end of December, resulting in a layoff of 175 people. Once
ongoing work on the No. 10 shaft is completed in late March or early April,
another 225 people will be furloughed.
Under any scenario, the new mine will not be in production anytime soon.
If the legislation passed and everything fell into place, "we're looking at
about a 10-year period of permitting, engineering and construction," the
official said, with the mine in operation early next decade.
The mine would produce "just north" of 1 billion lb of copper annually,
--Bob Matyi, firstname.lastname@example.org
--Edited by Keiron Greenhalgh, email@example.com