Tuesday, July 28, 2015

Study: Rosemont Copper mine has lost $3 billion in value due to permitting delays

Permitting delays have reduced the economic value of the proposed Rosemont copper mine by $3 billion according to a new study commissioned by the National Mining Association.

NMA commissioned  the  study "Permitting, Economic Value and Mining in the United States", "to demonstrate the economic impact of mining project permitting delays in the United States."   The study researched "selected mining projects at various stages of operations and permitting, in a number of states, to assess the delays that are associated with mine permitting."

The Rosemont copper project south of Tucson was one of the case studies analyzed for the study,   They concluded that "the Rosemont Copper project in Arizona continues in its attempts to secure permits, five years after the originally
planned start date of 2010. Over this period, the value of the project has fallen from $18 billion to $15 billion despite much higher copper prices."

The key findings are that :

  • Unexpected delays in the permitting process alone reduce a typical mining project’s value by more than one-third.
  • The higher costs and increased risk that often arise from a prolonged permitting process can cut the expected value of a mine in half before production even begins.
  • The combined impact of unexpected, and open-ended, delays and higher costs and risks can lead to mining projects becoming financially unviable.

The study found that permitting in the US takes 7-10 years compared to 2-3 years in Canada and Australia, countries with comparable environmental requirements.   I spoke with Katie Sweeney, General Counsel for NMA on our video magazine "Arizona Mining Review' and she said the solution is not to weaken environmental regulations but to require permitting agencies to coordinate their reviews and abide by deadlines.    There is also federal legislation being proposed to require agencies to complete their reviews within specific time-frames, comparable to those in other developed countries with stringent environmental standards.

1 comment:

  1. Anonymous5:12 PM

    Having worked on both sides of this issue, my opinion is that responsibilities for the delays is shared more or less equally between proponents and the regulations land the agencies that administer them.

    Unlike poker, the rules for this game are not plainly writ but are being created independently as proposals work their way through the system. The requirements and standards should be clearly written and enforceable, responsibilities and cost burdens should be spelled out and interagency cooperation and coordination should be required so that when approved by the lead agency, other agencies can not then create roadblocks of their own outside of the NEPA process unless they were not complied with in the NEPA review, and if not, then the NEPA process was flawed and needs to be reviewed.