Sunday, April 06, 2008

Like Water for Copper

(Photo - Augusta Resources mining materials. Other photos are available at Hilton Road) Tucson, Arizona. I wasn't able to attend the public meeting in Vail yesterday regarding the Rosemont Mine, but many did and the Star's Josh Brodesky has an article about the meeting that has generated a comment thread fifty deep and continuing. One of the comments mentioned the closure of the San Manuel mine, an event of profound financial consequence for a certain blogger, producing scar tissue I will have for the rest of my life. Australian giant BHP bought Magma for $2.5 B, and it never occurred to me that the morons in Melbourne would shut down the best (and freshly rebuilt) copper smelter in the world. Prior to that event, I had the naive view that competence and merit climbed the ladder. The shutdown occurred in 1999, and the election of Eggplant proved a vegetable could be president and ignore the constitution, lying with immunity. Locally, TREO proved that incompetence and arrogance could rule, lying with immunity.

The bad guys win on many occasions. The actual significance of Augusta Resources being a foreign company (Canadian) is not clear to me. BHP's mean spirited flooding of the San Manuel mine and dismantling of the smelter for scrap defy comprehension. They threw 2600 workers in the street as casually as tossing a beer can in the trash. We will never know, but I think an American company would have mothballed the place until copper prices restored acceptable cash flow. I cannot bear to think of what San Manuel could make at $3.75 copper. It makes me sick.

As I wrote last Thursday the Rosemont Mine has profound water consequences for the entire region including the city of Tucson. The experts can get technical, but even if the physics of consumption and contamination can be resolved, what about the economics? Is the mine really asserting that its water needs are not going to impact water rates for the entire region? Even without the mine, Arizona is heading for a water fiasco. (Maricopa is in it as deep as any of us.) The mine dramatically exacerbates an already difficult scenario. I offer the following warning: Barring the most aggressive effort to prevent it, taxpayers will subsidize the cost the mine incurs to obtain the water it needs. Just watch.

Readers against the mine may wish to consider that only legislation can stop the mine. The money in the ground is too powerful to defeat with existing law, and eventually Rosemont Copper will prevail. Congressmen Grijalva and Congresswoman Giffords have sponsored HB 4228. Minus this kind of horsepower (and is it already too late?), the community should recognize we face a when, not an if. One way or another, the community should insure the company handles the total, TRUE impact it has on an already looming water cost escalation we are going to incur, one way or another.

The days of cheap water are rapidly coming to a close, mine or no mine.

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