SABC promotes & supports development & growth of sustainable, responsible economic opportunities in Southern Arizona.

Rosemont, Rod Pace, sets the record straight…

Rod Pace wrote an execlent letter to the Pima County board of supervisors correcting  a few of  the misrepresentations that Mr Huckleberry Asserted in an earlier memorandum.

Click HERE to read the Orginal Letter or simply read our re-print below !

March 21,2011
Via Hand-Delivery

The Honorable Ramon Valadez, Chairman
The Honorable Sharon Bronson, Supervisor
The Honorable Ray Carroll, Supervisor
The Honorable Ann Day, Supervisor
The Honorable Richard Elias, Supervisor
Pima County Board of Supervisors
130 West Congress Street, 11th Floor
Tucson, Arizona 85701

Re: Proposed Rosemont Copper Mine

Dear Chairman Valadez and Honorable Members of the
Pima County Board of Supervisors:

I want to correct certain statements in order to set the record straight with respect to a recent memorandum addressed to the Board of Supervisors, dated March 9, 2011 and authored by Mr. Huckleberry commenting on the environmental impacts and the economic benefit of the Rosemont Project (the “Memorandum”). We understand that there will be different points of view about the relative merits of the proposed Rosemont Project, but we prefer that the focus of discussion be on facts, not distortions. While there are many more, I will only address a few of these in the Memorandum:

1. Rosemont has made and will make real, legally binding and substantial commitments to the community and to reclamation, both during the mine plan of operations and thereafter. Mr. Huckleberry highlights the voluntary commitment by Rosemont to create a $25 million community endowment!, which was included in Rosemont’s Mine Plan of Operations (MPO) submitted to the Coronado National Forest (CNF). Rosemont presented the MPO to the CNF in July 2007 and it contained an entire document that specified reclamation and mitigation of the operations areas and detailed a commitment of over $23 million in direct reclamation costs separate and apart from the community endowment proposed by Rosemont. In addition, Rosemont has received approval from the State Mine Inspector of its Mined Land Reclamation Plan and has submitted its financial assurance to perform its obligations under that plan. Finally, Rosemont is subject to additional post-closure regulation by other agencies, including the Arizona Department of Environmental Quality.

Mr. Huckleberry’s discussion also ignores the difference between residential developers that take land out of public use forever and the proposed 21-year projected project life and 10-year reclamation period for a project that uses public land that is legally available under the law for that use. Rosemont’s project is not a residential development and public land used for the project will return to the public domain once the reclamation activities are complete.

In short, Rosemont’s commitments to reclamation are real, legally binding and substantial, and they are subject to enforcement by state agencies.

2. Rosemont will positively contribute to the economic health of the County by providing many jobs and will pay significant federal, state and local taxes. With an unemployment rate close to 10 percent, we know that the Board of Supervisors is keenly interested in opportunities to create jobs. When evaluating the impact of an activity on job creation, economists consider the total creation of jobs, i.e., both direct and indirect job creation. That is why it is inappropriate to compare job creation by a medical systems firm to Rosemont, as Mr. Huckleberry has done. It does not make sense to compare job creation by a medical products firm to Rosemont, because both medical products and raw materials products are essential to society. We need both.

Mining supports a high number indirect jobs (such as suppliers, contractors, and vendors), resulting in the creation of 2,100 new jobs for the local area, as stated in the study done by the Seidman Research Institute at Arizona State University’s W.P. Carey School of Business, released on July 7, 2009. That study shows that the Rosemont Project will result in a sustained average of 2,100 additional jobs for a period of 21 years. It also shows that even after the project has ended, many of the indirect jobs will remain.
Mr. Huckleberry also has substantially understated the amount of taxes Rosemont will pay. In fact, Rosemont will likely pay more taxes than other businesses in Pima County. Mr. Huckleberry has ignored the fact that private business entities, such as Rosemont, must pay federal and state income taxes. The income tax rates used in the Rosemont 2009 Feasibility Study (the “Feasibility Study”) are 35% for federal and 7% state taxes. If we consider only the copper price, as the Memorandum did, at a copper price of $2.47 per pound, the Rosemont Project yields combined federal and state income taxes of$1.1 billion dollars (approximately $52 million per year). And, at copper price of $ 4.59 per pound, federal and state income taxes are $3.8 billion (approximately $181 million per year). In addition to paying substantial federal and state income taxes, Rosemont will pay, among others, severance taxes, property taxes and transaction privilege taxes. Finally, Mr. Huckleberry is confused about the level of property taxes for Class 1 property (which includes mining property), which is actually the highest in the state. Finally, the tax revenue will significantly multiply because Rosemont will require goods and services from businesses already located in Pima County, generating additional tax revenues.

3. Rosemont owns the mineral assets that Rosemont proposes to mine. Rosemont purchased them in 2005 from Triangle Ventures for $20.8 million. The statement that federal, state or local taxpayers own Rosemont’s mineral assets is untrue. Prior to selling to Rosemont, Triangle Ventures offered this land and mineral rights to Pima County for $11.5 million and the County declined that offer. The simple truth is that Rosemont owns the mineral rights and surface rights on its patented mine claims, and the mineral rights and associated surface rights as needed to conduct mining operations on its unpatented claims.

4. While the Rosemont Project is located in a portion of the Santa Rita Mountains, it is a very small portion. The characterization of the size of the Rosemont project with respect to the overall Ce:iw Duag, Santa Rita Mountains, is inflammatory at best. This mountain range contains roughly 200 square miles or about 125,000 acres of land. The footprint of Rosemont’s project is about 4,400 acres. The environmental review conducted by the CNF under NEPA will consider impacts to historic and cultural resources. This review will include consideration of historical and cultural references provided by the various tribes through oral and written history gathered over the past three years. We suggest that the parties allow the NEPA process to follow its intended path, including the issuance of an Environmental Impact Statement that documents and discusses the project’s foreseeable impacts.

5. The studies demonstrate that the Rosemont open pit will have geochemical levels equivalent to current groundwater quality. Thorough technical analyses have concluded that water remaining in the pit would not be toxic by any definition. As part of the NEPA process, the CNF is reviewing all of the geochemical properties of our proposed operations, which includes the open pit. During that process, the CNF selected drill core samples specifically to characterize the pit at closure. These drill core samples were geochemically tested using techniques to simulate rainfall and even an accelerated geochemical aging process in order to provide the information necessary to estimate the future chemical quality of the open pit. Modeling results have shown that the predominant contributor to water quality in the open pit is actually the current groundwater itself. Studies on evapoconcentration of the groundwater concentrates and known constituents in the groundwater demonstrate that none of these known constituents are toxic. In short, contrary to the statements in the Memorandum, there is no evidence that water collected in the pit will be toxic under any definition.

6. The Economic Projection Tables Used in the Memorandum Are Inaccurate and Misleading. Rosemont did not create or provide the tables included throughout the Memorandum, nor were they part of the Feasibility Study. These tables do not reflect anything Rosemont would consider reasonable. While we do not know who created them, they demonstrate a general lack of knowledge and expertise with respect to procedures for estimating or presenting costs.

For example, Table 1 overstates copper production by converting total tons of copper to pounds by using a metric conversion rate instead of the correct U.S. conversion rate of 2000 pounds per ton. In addition, the total pounds of copper in Table 1 do not reflect the smelter recovery losses provided for in the Feasibility Study. With exception of the $1.85 copper price from the Feasibility Study, the cost columns of the tables do not include the additional state income taxes of 7% or federal income taxes of35%, which are a significant expense.

Finally, although copper prices have increased, we are seeing increases in other operating expenses. For example, fuel costs are currently twice the level used in the Feasibility Study, which alone dramatically increases the operating, supplies and transporting costs and reduces profit. These changes in operating expenses are not reflected in the tables set forth in memorandum – only the increase in the price of copper. Obviously, this is one-sided and misleading.

Rosemont has carefully presented reasonable estimates of costs and returns in the published and peer reviewed feasibility studies subject to 43-101 and other security regulations. The profitability tables referenced in the Memorandum as “Rosemont’s own figures” are a fabrication.

Thank you for the opportunity to set the record straight on at least a few of the misstatements in the Memorandum. If you have any questions or would like to discuss the facts about the Rosemont Project in greater detail, we would be pleased to meet with you.


Rod Pace
President and Chief Executive Officer
c: Mr. C. H. Huckleberry