Sector
Industry Updates & Deals
The Copper State “In 2009, the mining sector shrunk because of the recession,” begins Madan Singh, Ph.D., former director of the Arizona Department of Mines and Mineral Resources. “But already, the mining industry in Arizona as well as in the rest of the world is recovering much faster than the rest of the economy.” He points to developing countries like China, India, and Brazil that are now moving ahead with infrastructure and development projects. After all, he adds, “everything around us is built using minerals.” Dr. Singh’s department, which was charged with the promotion of and record-keeping for Arizona’s mining industry, closed its doors in late January in a Governor Brewer-sponsored changeover. Still, others echo Singh’s optimistic outlook. According to Michael Anable, former natural resources advisor to Gov. Brewer and a business consultant for mining companies, “The mining industry is very, very big in Arizona, and right now it’s one of the only economic sectors that’s doing well.” Arizona is not a fuel mining state; the industry here is dominated by metals. The “Copper State” grosses $4.3 billion a year from mining and mines two-thirds of the nation’s copper, a mineral essential in the production of piping and wiring, electronics, heavy machinery and motor vehicles. Silver, gold, uranium and a host of other minerals are also mined here, some as byproducts of copper mining. The business is highly mechanized, so it does not employ nearly as many people as Arizona’s other major industry, construction (which maintains much higher employment even in the current economy). Still, the mining industry has a service sector built around it. In 2010, mining employed more than 11,000 people directly, and Singh estimates that it employed another 25,000 indirectly. As the economy recovers both domestically and internationally, however, some major unknowns loom on the horizon for Arizona’s
mining community. Most obvious is how the closing of the ADMMR will impact business. Anable, who helped engineer the change in museum leadership while working for Gov. Brewer, points out that the mining industry will not be hampered by the loss of this department. “If mining companies were concerned about the promotion of mining, there is nothing preventing them from hiring a PR firm.” Many who were involved with the mining and mineral museum that ADMMR ran, however, consider its loss extremely destructive to the mining community. Richard Zimmermann, one of the loudest critics of the plan, says, “The state mineral collection and supporting mine and mineral files served as an important reference collection for prospectors and mining companies. They have lost access to both.” The museum’s valuable mineral collection has now been transferred to the Arizona Historical Society and the collection will be used in a planned museum with a much broader focus on Arizona history. Beyond state politics, unknowns at the federal level are also poised to have a large impact on the mining sector. S. 409, a land exchange bill sponsored by Arizona’s U.S. senators, would grant Resolution Copper Mining access to 2,406 acres of federally-owned land near Superior, Ariz., known to contain valuable copper deposits. Many believe the mine would be a boon to job-starved Superior. Jon Cherry, a VP at Resolution Copper, says, “At peak production, the mine is expected to directly employ 1,200 high-paid workers and another 200 contract workers.” Additionally, he adds, the mine will have an economic impact of $46.4 billion over the course of its lifetime. The bill, however, remains highly controversial since many believe the land it opens to mining is environmentally sensitive and deserves its protected status. The mining sector is awaiting a decision by the U.S. Department of the Interior that would either open up land in another environmentally sensitive area known as the Arizona Strip to uranium mining or extend a two-year moratorium on drilling for another 20 years. As far as what the state can do to promote mining while metal prices are high, Anable sees a few options. He considers Gov. Brewer’s proposed tax reforms, especially those on the income tax, as a potential boon. He also sees any effort to cut bureaucracy for business as a step in the right direction. Recently, he says, the EPA has been very aggressive in enacting what he calls confusing and unnecessary reforms. How these reforms are carried out could have a large stake in how attractive Arizona looks to mining companies in the coming years. Arizona Department of Mines and Mineral Resources Environmental Protection Agency Resolution Copper Mining
www.resolutioncopper.com
U.S. Department of the Interior
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M a r c h 2011
www.admmr.state.az.us
www.epa.gov www.doi.gov
inbusinessmag.com
Photos: Resolution Copper Mining
by Lila Nordstrom