The strategy of not relying on “organic growth” appears to be a shift in the company’s previous statements that it is committed to developing the Copper World/Rosemont complex, with the Hudbay Board of Directors projected to make a final decision on whether to proceed in 2025.
Hudbay acquired the Copper World/Rosemont complex from Vancouver, B.C., junior miner Augusta Resource Corporation in July 2014 in a $500 million stock deal.
Hudbay initially planned to develop the Rosemont mine on the northeast flank of the Santa Rita Mountains. But that effort was derailed by a 2019 Tucson federal court decision upheld in May 2022 by the U.S. Court of Appeals for the Ninth Circuit.
The federal courts held that the U.S. Forest Service’s assumption that Hudbay had automatic rights under the 1872 Mining Law to permanently bury thousands of acres of public land with waste dumps was contrary to long-established law.
“The Service thus gave to Rosemont, essentially free of charge, the right to permanently occupy 2,447 acres of National Forest land with 1.9 billion tons of its waste rock based on an improper assumption,” Judge William Fletcher wrote in the appeals court ruling.
Following the federal court rulings, Hudbay shifted its development strategy to develop a $2.8 billion mining complex on 4,500 acres of private land it controls on the west side of the Santa Rita Mountains. Hudbay also began extensive exploration drilling that has significantly damaged the land and washes.
Hudbay must obtain air pollution and water quality permits from the state Department of Environmental Quality before it can proceed with mining.
Hudbay claims it will produce finished copper onsite by using a process that is not widely utilized in the copper industry to convert sulfide ore into nearly pure copper plates. The process would generate millions of tons of sulfuric acid that pose a significant pollution threat to the Santa Cruz River Valley.
HUDBAY HAS BEEN SUCCESSFULLY OPERATING MINES IN CANADA FOR MANY YEARS . IT IS A CANADIAN FOUNDED INSTITUTION THAT HAS HAD A GOOD TRACK RECORD MINING WISE . ITS TRACK RECORD REGARDING HUMAN RIGHTS VIOLATIONS RELATED TO ITS MINING ACTIVITIES HAS CREATED CONCERN , PARTICULARLY AT ITS CONSTANCIA MINE IN PERU .
HUDBAY HAS MOVED FROM SMALLER , HIGH-GRADE DOMESTIC MINES TO LARGE , LOW-GRADE(IN COMPARISON) OFFSHORE MINES IN PERU AND THE USA . THIS HAS CREATED A SHIFT IN BUDGETING REQUIRING INCREASED BORROWING . INVESTOR GROUPS THAT HAVE BEEN ABLE TO GAIN CONTROLLING INTERESTS ARE NOW DICTATING HUDBAY’S OPERATING PRIORITIES .
HUDBAY’S ROSEMONT PROJECT IN ARIZONA HAS A PROVEN POTENTIAL BUT THE BUREAUCRACY THAT IT FACES MAKES IT VERY TIME CONSUMING WHEN IT COMES TO BRINGING IN A NEW MINING OPERATION . THE OBSTACLES ARE MANY AND OCCUR AT MANY LEVELS WHERE POLITICS PLAY A SIGNIFICANT ROLE .
HUDBAY MAY HAVE TAKEN ON MORE THAN IT CAN HANDLE ALONE . JOINT VENTURES ON BILLION DOLLAR PROJECTS APPEARS TO BE THE ORDER OF THE DAY . THERE ARE SEVERAL MINING COMPANIES CURRENTLY OPERATING IN ARIZONA WHO WOULD BE INTERESTED IN A SHARE OF THE ROSEMONT PROJECT . AT LEAST ONE OF THESE HAS SMELTER CAPACITY .
HUDBAY WILL NEED TO RESET ITS CLOCK WHEN IT COMES TO ITS OPERATIONAL PRIORITIES . IT NEEDS TO REDUCE FINANCIAL RISKS BY FINDING A STRONG JOINT VENTURE PARTNER .
WHAT HAPPENED TO MY REPLY ?
HUDBAY IS HERE TO STAY IN ONE FORM OR ANOTHER . HUDBAY IS A CANADIAN MINING ICON AND HAS WEATHERED MANY CRISES FROM WHEN IT WAS FOUNDED . IT PROSPERED ON WELL-RUN DOMESTIC MINING OPERATIONS RELATED TO RELATIVELY SMALL BUT HIGH-GRADE BASEMETAL/GOLD DEPOSITS .
WHEN HUDBAY ACQUIRED THE CONSTANCIA PROJECT IN PERU IT WAS MOVING INTO THE INTERNATIONAL ARENA . THE DEPOSIT IS BIG , BUT LOW- GRADE . PERHAPS , HUDBAY TOOK ON MORE THAN COULD HANDLE BOTH FINANCIALLY AND TECHNICALLY . HUDBAY THEN MOVED ON TO ACQUIRE THE ROSEMONT PROJECT IN ARIZONA . THIS IS ANOTHER LARGE , BUT LOW-GRADE COPPER DEPOSIT REQUIRING BILLIONS OF DOLLARS IN CAPEX .
THE ROSEMONT PROJECT HAS BEEN BURDENED WITH US GOVERNMENT BUREAUCRACY AT EVERY LEVEL OF PERMITTING . AS SUCH , THE DEPOSIT SITS IDLE AND PRODUCES NO CASH FLOW . AT LEAST ONE MAJOR SHAREHOLDER GROUP HAS BECOME FRUSTRATED AND IS PUTTING PRESSURE ON HUDBAY TO START GENERATING REVENUE AND SHAREHOLDER BENEFITS .
TO SEE OR MERGE IS THE DECISION THAT HUDBAY MUST MAKE . THERE ARE CURRENTLY MINING COMPANIES OPERATING IN ARIZONA THAT WOULD BE INTERESTED IN A MERGER . AT LEAST ONE COMPANY ALREADY HAS SMELTER FACILITIES THAT COULD BE USED TO PROCESS HUDBAY’S ROSEMONT PRODUCTION . A MERGER WOULD BE BEST UNDER THE CIRCUMSTANCES .