Water Pressure

The Rosemont Mine hits a new snag over a key permit

The proposed Rosemont Mine suffered another setback last week when the U.S. Army Corps of Engineers said the plans for the open-pit mine do not properly compensate for the potential environmental damage it would cause to fragile Southern Arizona waterways.

As a result, Rosemont Copper's ability to obtain a key water permit to begin mining remains in doubt.

Rosemont Copper is in the final stages of acquiring the permits it needs to begin operation of a milewide open-pit mine in the Santa Rita mountains southeast of Tucson.

But the company has hit repeated problems with acquiring a Section 404 permit under the Clean Water Act. Both the Corps of Engineers and the Environmental Protection Agency have raised red flags about the impact the mine could have on several Southern Arizona streams.

Col. Kimberly M. Colloton of the Corps of Engineers told Rosemont president and CEO Rod Pace in a May 13 letter that the agency's review of Rosemont's mitigation plan showed it "would not fully compensate for the unavoidable adverse impacts that would remain after all appropriate and practicable avoidance and minimization measures have been achieved."

Colloton said the Corps had yet to make a final decision, but the agency had been meeting regularly with Rosemont officials on mitigation issues and would "now change its focus toward preparing a final permit decision."

Randy Serraglio, a conservation advocate with the Center for Biological Diversity (who also pens a regular column in the Weekly), said the EPA's letter puts the project "on hospice alert."

"If mitigation is inadequate, then the Corps can deny the permit and that would be a deal-breaker for the mine," Serraglio said. "They haven't issued a final decision yet, but it's hard to see how they can approve this when they have said that Rosemont's mitigation plan is inadequate."

Pace downplayed the importance of the letter, saying that the company was continuing to meet with Corps officials.

"The letter from the Corps is nothing new from what we announced in the May 1 permitting press release," Pace said in an emailed statement. "The reference in the letter to mitigation not fully compensating for impacts is based on a judgment call and Rosemont Copper has the option to submit an amended package with additional mitigation. Whether we amend our package to include more mitigation acres, or enhance the existing proposals to be more responsive to the Corps' judgment, or both, the concerns get addressed and the issues resolved."

The latest setback comes as the U.S. Forest Service is wrapping up work on the Record of Decision that could allow the mine to proceed. But that process, originally scheduled to be completed by the end of April, has been slowed by a deluge of public comments on the mine proposal.

Rosemont officials have consistently insisted that any permitting snags were brief bumps in the road. But if the EPA and Corps of Engineers do not issue a 404 permit, Rosemont will likely have to go to court to try to force a reversal of that decision.

And if the 404 permit is granted, it's likely that mine opponents will file a lawsuit to challenge that decision, so a court battle looms either way.

As the final permitting process plays out, the Rosemont board of directors has been successfully fending off a hostile takeover by another Canadian mining company, Hudbay Minerals.

Hudbay, which owns a stake in Rosemont, had tried to buy a controlling interest in the company by persuading stockholders that it had more expertise in completing the permitting process and operating a mine.

But Rosemont officials, who have said they hope to have all necessary permits to begin preparing the mine for operation by the end of June, said Hudbay's offer was a low-ball proposal and the stock would be worth more once Rosemont had cleared the permitting process.

The online Motley Fool, which provides analysis of the stock market, noted earlier this month that Rosemont was facing tight financial deadlines.

"All of these deadlines are converging and don't give Augusta Resources much chance to run out the clock on Hudbay's offer," contributor Rich Duprey wrote. "With the Environmental Protection Agency also not on board with Rosemont, believing the project is 'out of balance with the impacts' it will cause the environment—not to mention that it has veto power of the Army Corps' permitting—Augusta's plans as currently envisioned look to be in grave doubt."

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