U.S. Clears Land-Swap for Rio-BHP Copper Mine

By Dow Jones Business News, December 21, 2014, 08:55:00 PM EDT

SYDNEY--U.S. President Barack Obama has signed into law legislation clearing a land-swap deal that will underpin the proposed US$6 billion development of one of the world's largest untapped copper deposits, Rio Tinto PLC (RIO) said Monday.

The Resolution copper project in Arizona, which is 55% owned by Rio and 45% by partner BHP Billiton Ltd. (BHP.AU), is expected to be one of the next major investments for London-based Rio Tinto. In recent years, Rio Tinto has relied on another commodity--iron ore--for the bulk of its earnings.

The controversial land-swap deal--first proposed nearly a decade ago, and which Rio said it needed for the project to be commercially viable--allows for the exchange of 2,400 acres of land around the deposit owned by the U.S. government for 5,400 acres of privately owned land held by Rio Tinto subsidiary Resolution Copper.

"Passage of the land exchange at Resolution will help us establish the full potential of the resource and provides a clear road map to commercial development," Rio Tinto copper chief executive Jean-Sebastien Jacques said in an emailed statement.

Mr. Jacques said the copper market outlook is strong and that Rio aims to ensure it is able to capitalize on future demand for the metal, used widely in construction and manufacturing. "Resolution is a central component of our copper strategy and we are willing to invest in development over many years to bring high-quality, long-life copper assets into production," he said.

Rio Tinto says the deposit is the third-largest known undeveloped copper resource in the world. The project will now be subject to a comprehensive environmental and regulatory review process, it said.

Native American representatives groups, including the National Congress of American Indians, have argued the federal land in the Tonto National Forest is a place of worship for the Apache and Yavapai people, and is home to ancient settlements and burial sites.

According to the project website, Rio Tinto expects to be producing copper from the deposit--which is nearly 7,000 feet deep, or five Empire State Buildings below the Earth's surface--in the mid-2020s.

The site could produce around 500,000 metric tons of copper a year, according to the website. Output at that level is enough to meet one-quarter of annual U.S. copper demand, said Rio, which estimates the resource could last for more than four decades.

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U.S. Clears Land-Swap for Rio-BHP Copper Mine