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NOVEMBER 11–24, 2019 / THE NORTHERN MINER
Court rejects Hudbay motion to reconsider Rosemont COPPER
| Company keeps working on its appeal
BY TRISH SAYWELL
T
tsaywell@northernminer.com
he U.S. District Court for Arizona has turned down Hudbay Minerals’ (TSX: HBM; NYSE: HBM) request that it reconsider its ruling in July that prevents the company from developing its Rosemont copper mine in the state. In October, U.S. District Court Judge James Soto said there was no reason to reconsider the earlier court ruling that challenged and overturned the U.S. Forest Services’ approval of the project. “This ruling confirms the court continues to inappropriately assume the responsibility of the regulators, misrepresenting current mining laws and regulations that govern mining activities on public lands throughout Arizona and the U.S.,” Hudbay’s director of investor relations, Candace Brule, told The Northern Miner in an email response to questions about the latest setback for the company. Hudbay did not issue a press release on the court’s denial of the motion for reconsideration, and says it is not in a position to share details about the timing or date of its appeal. “We will continue our work to appeal the decision as we evaluate the next steps for the project,” Brule said. The U.S. Forest Service issued its decision in June 2017, after a process that took 10 years, involving 17 cooperating agencies at various levels of government, 16 hearings, over 1,000 studies and 245 days of public comment resulting in more than 36,000 comments. “Hudbay believed the court went beyond its authority by assessing the validity of Rosemont’s mining claims,” Brule said of the court’s initial ruling in July. “As such, we filed a motion to request that the court
“THE COURT CONTINUES TO INAPPROPRIATELY ASSUME THE RESPONSIBILITY OF THE REGULATORS, MISREPRESENTING CURRENT MINING LAWS AND REGULATIONS THAT GOVERN MINING ACTIVITIES ON PUBLIC LANDS.” CANDACE BRULE DIRECTOR OF INVESTOR RELATIONS, HUDBAY MINERALS
Chile in turmoil CHILE From 1
Hudbay Minerals’ Rosemont copper property in Arizona. HUDBAY MINERALS
amend the judgment and remand Rosemont’s final record of decision to the Forest Service for additional investigation or explanation, while leaving the FEIS in place during this time.” The court ruling involved Hudbay’s plan to use public lands next to the mine for its waste-rock, stateof-the-art tailings facility and other support facilities related to Rosemont’s operations. “The use of public lands to support mining operations from valid mineral claims is a practice that has been adopted by other mines throughout the country, and is consistent with the regulations set out by the agencies that monitor and regulate these activities,” the company says. In March, Hudbay’s board of directors approved a US$122-million early works program for Rosemont — part of the US$1.9-billion capital
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Chile President Sebastian Pinera speaking to the media in July 2019. GOVERNMENT OF CHILE
expense estimate for the project. In a press release on March 28, management said it expected to seek board approval to start Rosemont construction by the end of 2019, which would enable first production by the end of 2022. The early works program was given the green light after Hudbay announced on March 21 that it had received the approved mine plan of operations (MPO) from the U.S. Forest Service. The MPO issuance was the last administrative step in the permitting process, the company said. Rosemont received its Section 404 water permit from the U.S. Army Corps of Engineers on March 8. Rosemont’s environmental impact statement exceeded 2,600 pages, and its MPO weighed in at 4,000 pages. The company envisioned using dry-stack tailings, which mechanically filter out 85% of the water from the tailings and leaves a material that Hudbay describes as resembling “damp sand.” The water extracted could be reclaimed and reused for mining purposes, Hudbay said. If built, Rosemont would be the third-largest copper mine in the U.S., accounting for 10% of the country’s annual copper production. Over a projected 19-year mine life, Rosemont is expected to produce 127,000 tonnes of copper annually. Hudbay added the project to its portfolio through its acquisition of Augusta Resource in September 2014. The near-surface deposit consists of copper, molybdenum, silver and gold mineralization. It is a high-tonnage, skarn-hosted and porphyry-intruded deposit that would operate as an openpit, shovel-and-truck operation. A technical report completed in 2017 envisions a final pit measuring 1,828 metres east to west and 1,828 metres north to south, with a total depth of 884 metres, down to 945 metres. The processing facility is 305 metres east of the pit, and the dry-stack tailings facility, 457 metres southeast of the pit. Rosemont contains 536.2 million measured and indicated tonnes grading 0.29% copper, 0.011% molybdenum and 2.64 grams silver per tonne, and 62.3 million tonnes grading 0.30% copper, 0.01% molybdenum and 1.58 grams silver per tonne. TNM
country’s powerful mining industry has been limited compared to the turmoil seen in most of the country’s big cities, Patricio Concha, a director at Chile’s Chamber of Mines, told The Northern Miner. Mining unions at several big mines, including Codelco’s Andina and BHP-controlled Escondida, have held limited stoppages in sympathy with the protests, and against police violence. Other producers have faced delays in shift changes and mine supplies. A national strike by port workers could hold back copper-concentrate deliveries from Lundin Mining’s (TSX: LUN) Candelaria mine, CEO Marie Inkster said on Oct. 23. Antofagasta (LON: ANTO) said that it expected the unrest to lower copper output during the current quarter by 5,000 tonnes, or less than 1% of annual production. However, the impact on the industry could increase if the crisis drags on. The reasons for the unrest are clear. Although Chile is the region’s wealthiest and most stable country, with a dynamic business sector, world-class universities and stable institutions, life for most Chileans is not easy. Chile’s average US$16,000 income, comparable with some European countries, masks the fact that most Chileans survive on less than US$550 a month. Behind Santiago’s gleaming office buildings and the soaring Costanera skyscraper, the tallest in South America, lies a highly divided society. Public education and healthcare systems, while years ahead of its neighbours, remain threadbare compared to those of most countries in the Organization for Economic Cooperation and Development, of which Chile is also a member. Its pioneering, privately run pensions system leaves many retirees living in poverty. Economists have long warned that the country risks falling into the middle-income trap. As people’s incomes rise, their aspirations rise faster than the country can meet them. Pinera’s predecessor Michelle Bachelet hiked taxes and borrowing to provide free higher education to poorer students. The new government has slowed spending, which has increased tensions. Nevertheless, the scale and intensity of the violence has shocked many. The government says the arson attacks against the metro stations (which may have used accelerants not available in Chile) must have been planned and coordinated, perhaps ahead of the APEC and COP25 summits. The government has now cancelled both events amid security concerns. For now, investors are sanguine. “Until [recently], Chile was still thought of as probably the leading country in South America in which to invest … at this point there’s
nothing to change our perspective,” Don Lindsay, CEO and president of Teck Resources (TSX: TECK-B; NYSE: TECK), told analysts on a conference call on Oct. 24. The company’s US$4.7-billion Quebrada Blanca 2 project is the largest investment underway in Chile. Once in production, the expanded mine will produce an average 316,000 tonnes per year of copper-in-concentrate during its first five years of operations. It will take more than a fortnight of turmoil to completely upturn Chile’s strong reputation abroad. On Oct 24, with protests still raging, the government announced that Amazon had decided to build a data centre in the country. “People who are educated and know Chile pretty well see this as an anomaly,” Alex Black, CEO of Rio 2 (TSXV: RIO), told The Northern Miner. The unrest has not affected Rio 2’s plans to advance its Fenix gold project in northern Chile’s Maricunga belt. No investors had contacted the company to enquire about the unrest, he said. But there is significant uncertainty about what comes next. President Pinera’s initial battery of proposals, including higher basic pensions, a state-supported minimum income, cuts in electricity tariffs and higher taxes for the wealthy, was quickly dismissed as inadequate by the opposition. Incoming f ina nce minister Ignacio Briones is preparing to renegotiate the government’s proinvestment tax reform bill, currently in Congress, on radically different lines. Business leaders say higher taxes look inevitable, as the government strives to fulfill social demands. “We know that we are going to have to stick our hands in our pockets, and that it’s going to hurt,” warned the head of CPC, Chile’s top business organization. But many of those on the streets and in Chile’s opposition want more drastic change. Hours after the state of emergency was lifted, opposition politicians, including the heads of both houses of Congress, agreed to present a bill to hold a referendum on a new constitution. Many see the existing document, introduced under the military regime, as a legal straitjacket, which prevents many desirable reforms. It also contains guarantees that business leaders say have underpinned decades of massive foreign investment, especially into the mining sector, such as compensation for expropriation by the state. The government and business leaders hope that negotiations on the new social pact will seek a balance between meeting the public’s demands and reinforcing the qualities that have made Chile the region’s most reliable economy for over a generation. But for now, such a deal looks a long way off. “It’s too early to call where this is going to end up,” Black said. TNM
2019-11-05 8:17 PM