Hudbay CEO suggests Rosemont permitting is a certainty

Hudbay Mineral’s CEO David Garofalo says the Toronto-based, multinational mining company only makes significant investments in countries where the company is “certain” that all necessary permits will be issued.

Hudbay’s investments include the highly controversial mile-wide, half-mile deep Rosemont open pit copper prospect in the Santa Rita Mountains on the Coronado National Forest southeast of Tucson, Arizona.

“We focus on investment grade countries in the Americas,” Garofalo said in an interview with the Commodities Dig. “(There is) really only five countries where we would put meaningful capital to work in because we want the certainty of permitting, and we want the certainty of getting our capital back out and getting that return on investment.”

Garofalo’s sweeping assertion that Hudbay is “certain” to obtain a crucial Clean Water Act permit from the U.S. Army Corps of Engineers and a favorable final Record of Decision from the Coronado National Forest stands in sharp contrast to the significant environmental issues that still must be addressed at Rosemont.

Rosemont’s previous owner, Augusta Resource Corp., failed to obtain the crucial permits after more than eight years of effort. The reason is straightforward: The Rosemont project would inflict severe and permanent damage on a rare Sonoran Desert aquatic ecosystem that supports 11 threatened and endangered species.

The Clean Water Act requires whoever owns the Rosemont prospect to develop a plan to fully mitigate the unavoidable damage the mine would inflict on the environment. Augusta Resource failed to develop such a plan. And so far, Hudbay has not publicly presented its mitigation plan.

Garofalo told the Commodities Dig that he was not surprised that Augusta failed to obtain the Clean Water Act Section 404 permit because it typically takes more than a decade to complete the permitting process. He also said Hudbay expects permitting to continue into 2016.

“We’ve always had a view on permitting that was quite a bit more prolonged than (Augusta’s). This has not surprised us,” Garofalo said in the July 2014 interview. “In Arizona, it’s an established copper mining jurisdiction, these mines typically take 10 to 12 years to get permitted and Augusta right now is about year eight-and-a half in the permitting process. So our view is we are still about a year-and-a-half away from the permitting. We will not be disappointed if this permitting goes into 2016. That’s what we fully expected. We baked that into our evaluation.”

Hudbay acquired the rights to Rosemont last July when it purchased Vancouver, B.C., junior miner Augusta Resource in a C$555 million stock deal.