Rosemont Mine study touts economic benefits

A study released Tuesday said the proposed Rosemont Copper mine would pump $745.1 million annually into the local economy, but a group opposed to project calls it a PR spin for a project desperate for public support.

The mine on the east side of the Santa Rita Mountains would also leave a residual boost of $75 million annually for five years after it shuts down, according to the research.

The $45,000 study was done by the Seidman Research Institute at Arizona State University’s W.P. Carey School of Business and commissioned by the Arizona Department of Mines and Mineral Resources. But mines director Madan Singh said it was paid for by Rosemont Copper.

Singh said the study showed development of the mine would be an economic benefit to Southern Arizona’s long tradition of copper mining, producing jobs with wages that would be 28 percent higher than the average wages in the region.

But Morris Farr, acting president of Save the Scenic Santa Ritas, which opposes the mine, called the study the latest in a series of attempts by Rosemont to get positive press.

“It’s an effort on their part to gain some legitimacy, to get somebody else to talk about the mine,” Farr said.

The mine appears to be waging an uphill battle in its bid to have the U.S. Forest Service approve using its land for the opertion. Officials and organizations in Sahuarita and Green Valley have been vocal in their opposition; state Game and Fish officials have said it would destroy wildlife habitat; the Pima County Board of Supervisors opposes the project and has sought a voice in mitigating environmental impacts; and U.S. Reps. Raul Grijalva and Gabrielle Giffords have asked the Secretary of Agriculture to help block Rosemont.

But Rod Pace, president and CEO of Rosemont Copper, told the Green Valley Forum on Wednesday that the company has spent more than $80 million on the project and has gone to great lengths to address questions and concerns and remain transparent. The company offers public tours of the site twice a week and has been meeting with local groups publically and privately for months.

Money over time

Lee McPheters, a professor in ASU’s department of economics, said that unlike research projects that might look at a single event, such as the Super Bowl, the study sought to determine the economic impact of the mine over time, from the first four years of engineering, design and construction, through about 20 years of production and five years of winding down.

Once the mine gets up and running, the company will be directly contributing $97.4 million a year, $20.2 million of which will go to wages, according to the study. About $4 million a year will go to local governments by way of taxes.

Beyond the direct spending by Rosemont will be the indirect impacts for goods and services to support the mine and its workforce. That will amount to a total economic impact of $745.1 million average per year for the 20 years the mine is in production, contributing $118.7 million a year in wages and $13.9 million annually to local governments, according to the study.

McPheters and Singh said the study looked just at the economic impact of the mine and did not take into consideration what critics insist are overwhelming negatives, including impacts on water, tourism and scenic beauty.

“What we feel we’ve provided here is one piece of information that’s valid and reliable that then can be put up and evaluated against other information,” McPheters said. “This isn’t a study showing the plusses and the minuses.”

Farr, a nuclear engineer who taught at the University of Arizona for 26 years, said the study did nothing more than “show how wonderful this is.”

But he called the project “a big industrial complex that’s dirty and has lots of traffic problems.”

“This doesn’t fit with the image of the Tucson area,” he said.

A 50-page study commissioned and paid for by Save the Scenic Santa Ritas indicated that a 1 percent drop in tourism in the area would offset the economic benefits of the mine.

“It’s going to be a disaster,” Farr said, adding that the 400 to 500 people employed directly by the mine “is not really that big a contribution to the area.”

About the study

The study used Rosemont Copper’s mine plan of operations and updated feasibility study done in January. All of the fitures are based on 2008 dollars. Another assumption used is $1.75 per pound for the price of copper. The New York Mercantile Exchange’s Comex on last week Tuesday had July copper futures trading around $2.20 per pound with December futures at about $2.30 per pound.

McPheters said the study was done using a model developed by Regional Economic Models Inc. (REMI), based in Amherst, Mass., initially developed in 1980 to improve public policy decisions through regional forecasting models.

Singh said his department commissioned the study about four months ago. In light of the state’s budget deficit, the Department of Mines and Mineral Resources has been unable to wrangle funding to continue such economic studies. He accepted Rosemont Copper’s offer to pay for the study but he said it was done independently by ASU researchers.

Rosemont Copper is a division of Augusta Resource Corp., which acquired the mining site 30 miles southeast of Tucson in 2004. Most of the actual mining would be on land owned by the company but it needs to use U.S. Forest Service land for processing and storage.

The Forest Service is in the process of developing a ruling on the mine that it expects to issue by July 2010. Rosemont officials say they are hopeful they can begin mining by 2011.

But Farr said that isn’t likely to happen.

“We’re relatively confident that we’re going to win,” he said.

“Every day that Rosemont spends money but doesn’t have income is, in a way, kind of a victory for our side.”

Dan Shearer contributed to this story. Contact reporter David Hatfield at dhatfield@azbiz.com or 520-295-4237.