Resolution Copper seeks support by wielding checkbook

Published by MAC on 2011-01-10
Source: Tuscon Sentinal

Copper mine seeks support by wielding checkbook

Resolution Copper Mining forges pacts with Superior, stakeholder groups

By Jennifer A. Johnson

Cronkite News Service, Tuscon Sentinal

3 January 2011

SUPERIOR - Empty storefronts line Main Street, boarded-up reminders of the days when mining made this town's economy hum. Jobs are scarce for those who aren't able or willing to drive 30 miles or more west into the Phoenix metropolitan area.

For Mayor Michael O. Hing, it only makes sense to support a plan to mine a huge copper deposit deep below the national forest just east of town. Resolution Copper Mining LLC says the mine would employ hundreds over the next 60-plus years.

"This is an opportunity to allow the company to innovate and create jobs in Superior," Hing said. "Why would you want to hinder a God-given ore body like that?"

Hing has another reason to support the mine despite concerns raised by Native Americans, conservation groups and some Superior residents: an agreement in which the company promises what could total millions of dollars over the life of the mine provided that he and members of the Town Council formally back the project and continue doing so.

In the "mutual benefits agreement" signed in 2008 and renewed recently, the town pledged its support for federal legislation that would make the mine possible by exchanging protected land in the Tonto National Forest for parcels of comparable value elsewhere in the state. Any official communication opposing the plan to the governor or a member of Arizona's congressional delegation would void the deal, and the town agreed to provide letters of support to those same officials.

A Cronkite News Service review found that in promoting its plans Resolution Copper has created similar agreements with groups whose opposition could be detrimental:

- Resolution Copper has offered in return for a rock climbing group's support to press the federal government to establish alternate climbing sites. It also has proposed paying the group $50,000 to help establish new climbing routes.

- Resolution Copper purchased and made part of the proposed exchange family-owned grassland in southern Arizona and mesquite forest near San Manuel that Audubon Arizona and The Nature Conservancy, among others, want to preserve. Both groups have taken no stand either way on the land exchange, drawing the ire of some other conservation organizations.

David Salisbury, CEO of Resolution Copper, said the company has cultivated relationships with groups around the state to try to build consensus and address concerns.

"Anybody that has raised their hand and had an interest we've been willing to bring them to the table," he said. "We recognize that we have an impact and we want to make sure we are playing a part in mitigating, where we can, at least some of those impacts and exercising our civic responsibility as a good corporate citizen."

But Sandy Bahr, executive director of the Sierra Club's Grand Canyon Chapter, which has consistently opposed Resolution Copper's plans, called the company's approach "particularly ugly."

"From throwing cash around to trying to get people to withdraw their opposition, the greater public interest is going out the window," Bahr said.

The negotiations have created sharp divisions within Superior, the rock-climbing advocacy group, local chapters of the Audubon Society and conservation organizations.

"I think it's part of Resolution Copper's plan to wear people down," said Manuel Rangel, who eventually left the Queen Creek Coalition, the group advocating for rock climbers.
The swap

More than a mile beneath an area known as Oak Flat lies what Resolution Copper calls the largest untapped copper lode in the U.S. But because an order by President Dwight D. Eisenhower withdrew some of the land from mining, recognizing it as a valuable recreational resource, the company must trade the government land of equal value to take over Oak Flat.

A joint venture of Anglo-Australian mining giants Rio Tinto and BHP Billiton, Resolution Copper has proposed using a technique that would remove the ore by tunneling into the earth. But opponents contend that even with that technique the landscape will subside and the water table will be undermined, drying up surface water and harming wildlife.

Saying the mine would create jobs and boost the state's economy, Republican Sens. John McCain and Jon Kyl and Democratic Rep. Ann Kirkpatrick, who lost her re-election bid in the district that includes the site, have sponsored bills in the Senate and House that would trade about 2,400 acres at Oak Flat for nine blocks of land elsewhere in Arizona comprising about 5,500 acres.

Fierce opposition from conservation groups and Native Americans, who consider Oak Flat and its surroundings sacred, helped stall the legislation in the past several years. So did the 2008 indictment of former Rep. Rick Renzi, R-Ariz., whose district included the mine site, on charges that, among other things, he tried to enrich himself and an associate from the exchange.

Doug Kysar, a professor who specializes in environmental law at Yale Law School, said from the perspective of the mining company it's good corporate citizenship to try to achieve support and consensus.

"These negotiations are going on in a new era of corporate responsibility," Kysar said. "Resolution is trying to achieve a broad base of support for the project, and you will hopefully see it in the operations of the mine."

But Erica Rosenberg, a former staff member of the U.S. House Resources Committee who now works for the advocacy group People United for Parks, said the process in such dealings isn't very transparent. She called it a "divide-and-conquer" approach to negotiation rather than taking into account the broader public need.

"These agreements seem to confer benefits for specific groups, be it environmental groups or not," she said. "It's just not what you do with public lands."
Tension in Superior

"We'd have to be stupid to accept this agreement as it is," Soyla Peralta, a member of the Superior Town Council, bellowed at a meeting in early December.

"I am so disappointed by this community," said Hank Gutierrez, another council member. "We are going to mess up an opportunity."

Emotions boiled when council members discussed whether and how to renew the town's 2008 "mutual benefits agreement" with Resolution Copper, which was set to expire in late December.

Many of the several dozen residents who turned out at the Superior Senior Center didn't wait for the call to the public before shouting their opinions, as well as booing or clapping as council members made points.

Councilman Gilbert Aguilar said he supports the mine but considered the agreement weighted in Resolution Copper's favor.

"If we don't check on some of these things, we can really hinder what goes on in this town," said Aguilar, who at a later meeting voted for the agreement. "We are all for the mine, but if we don't check on these things we aren't doing our jobs."

The document, renewed in late December, promises Superior $100,000 per year before passage of the land swap, then after passage $200,000 in the first year, $300,000 in the second and $400,000 each year after that.

Allocated by a board that includes company officials and Superior residents, the money could be used for "social impact" projects such as promoting tourism, improving parks and bolstering school programs and facilities.

The land exchange would provide Superior, which is surrounded by federal land, the opportunity to purchase from the U.S. government parcels totaling over 550 acres, including its airstrip and other land owned by the U.S. Forest Service. Under its agreement with the town, Resolution Copper would make available an $8 million interest-free loan with which to purchase the land.

The town could wind up getting that land for free; under the land swap legislation, if the parcels Resolution Copper is offering for Oak Flat are found to be more valuable, that amount would be credited to Superior.

The agreement also would transfer to Superior, at no cost, title to the town's cemetery, which is on federal land.

The raw emotions extend beyond council meetings. With the land swap uncertain, community members who support the mine - it's commonly referred to as "the project on the hill" - have placed signs of support in windows along Main Street.

But Richard Green, a former council member, said the town is giving away too much by agreeing to not take formal positions against Resolution Copper.

"Signing this agreement could put a muzzle on future councils in order to keep these benefits," he said.

Pamela Rabago, a real estate agent, said Superior needs the jobs and that Resolution Copper has been generous.

"They're the first mining company that has ever offered us anything," she said.

In an interview, Hing said signing an agreement with Resolution Copper is a way to protect the town's interests.

"Right now the public opinion is that we support what's going on on the hill," he said. "It's not just to provide current jobs and future jobs. To me it's a chance to provide funds to the community for development."

Other benefits offered by the agreement don't come for free. The agreement would be void if Superior annexes any of Resolution Copper's property or creates a special taxing district to benefit from its operations, for example.

Under the terms of the agreement, the town would have to pledge to develop plans for the property near the airstrip in cooperation with the company.

In interview, Resolution Copper's Salisbury said a partnership benefits both Superior and the company. He noted that agreement is subject to the town government's processes and approvals.

"It does contain a support letter because you'll have people try to get something for nothing and then go out and try to trash our project," he said.
A group divided

For more than two decades, Manuel Rangel has scaled Winnebago Wall, Diamond Buttress, Wounded Knee Wall and other popular climbing sites among and around the boulders studding Oak Flat and nearby Devil's Canyon, which has water year-round and is a magnet for birds and other wildlife.

"It's a great way to get away from the crowded city," Rangel said. "You've got fresh air, crystal clear waters and beautiful green trees."

In 2004, concerned about the mine plan, climbers who frequent the area formed the Friends of Queen Creek, now the Queen Creek Coalition. Members began sending letters urging Congress and former Gov. Janet Napolitano to preserve Oak Flat.

In May 2010, Rangel and others separated from the Queen Creek Coalition over the issue of approving an agreement with Resolution Copper.

Two years before, Resolution Copper proposed a letter of intent in which the group would offer letters of support for the land swap to Arizona's congressional delegation.

In that document, the company proposed adding language to the legislation specifying that $1.25 million Resolution Copper had already proposed paying to the U.S. Forest Service be used to promote and enhance alternate rock-climbing opportunities.

The letter also said the company would provide $50,000 to the Queen Creek Coalition to buy hardware with which to develop new routes.

The land exchange includes three private parcels offering opportunities for rock climbers.

Members and former members said the group, unable to reach consensus on an agreement, approached Resolution Copper about the possibility of simply not opposing the mine rather than stating support.

A June 2009 e-mail from Salisbury, the company's CEO, addressed that question by saying the company was "re-evaluating the terms under which we could accept such an offer."

"I must inform you that the nature and monetary value of the terms in the Letter of Agreement were contingent on support of the land exchange from the Queen Creek Coalition," said the e-mail, which Resolution Copper confirmed as authentic.

As of late 2010, the group and Resolution Copper were still negotiating terms of an agreement that would include statements of support.

"It was endorse or else," said Fred AmRhein, who separated from the group and helped found Concerned Climbers of Arizona, which opposes the mine.

But Paul Diefenderfer, who remained with the Queen Creek Coalition, said it's in the group's best interests to deal with Resolution Copper since the mine is likely to move forward anyway.

"What choice did we really have?" Diefenderfer said. "The mine told us if you oppose us, you won't get much."

Salisbury said that Resolution Copper wanted a commitment that climbers would stop lobbying Congress against the land exchange before addressing what the group wants.

"Why would we spend money for someone that continues to oppose us?" he said.
'It's a red flag'

Bob Witzeman, conservation chair for the Maricopa Audubon Society, often drives to Oak Flat to enjoy the diversity of birds drawn to the area's rocky hillsides and canyons, its large trees and the water in Devil's Canyon.

If he's lucky, a black-chinned sparrow, which is on the National Audubon Society's watch list of species in decline, will make an appearance.

Witzeman said he's disappointed that Audubon Arizona, an umbrella group for local chapters around the state, hasn't come out in opposition of the land exchange. He contends that the reason lies in $250,000 in grants and donations that Resolution Copper and Rio Tinto have given to the Audubon Arizona since 2003.

"We would be brain dead to believe that the money they've given to Audubon Arizona doesn't have anything to do with the land exchange," Witzeman said. "It's a red flag."

Adding to his concerns: Two parcels prized by Audubon Arizona and The Nature Conservancy, which advocates for preserving ecologically valuable land, are included in property Resolution Copper wants to trade for Oak Flat: nearly 1,000 areas of grassland that are part of the Appleton-Whittell Research Ranch southeast of Tucson and 3,100 acres of mesquite forest on the 7B Ranch near San Manuel.

Leaders of Audubon Arizona and The Nature Conservancy have said they neither support nor oppose the overall plan. But each group has formally attested to the conservation value of the Appleton-Whittell and 7B Ranch parcels, something that Resolution Copper has noted prominently in letters and testimony to Congress.

Resolution Copper's website lists those groups, as well as Superior, on a page touting partnerships that "enable us to offer unique solutions to challenges in the areas of environmental, economic and social well-being."

The Appleton-Whittell property would be deeded to the Bureau of Land Management's Las Cienegas National Conservation Area, which ties into the research ranch. The National Audubon Society manages the ranch, which is a haven for birds and other wildlife.

Linda Kennedy, director of the ranch for Audubon, said a Resolution Copper consultant worked with her group and others, including the Sonoran Institute, The Nature Conservancy and the Bureau of Land Management, to identify parcels that would be of value in the swap.

"We get no financial benefit from this exchange," Kennedy said. "This is about conservation."

Sarah Porter, executive director of Audubon Arizona, said her organization got involved when Resolution Copper's former CEO, Bruno Hegner, attended a meeting to explain all of the parcels proposed in the exchange and asked for support. She said Audubon Arizona has pressed, among other things, for Congress to require detailed study of the mine's environmental impact.

"We asked: What can we do to make sure there is the least damage by the mine? What can we do to make sure there is the maximum amount of mitigation and the maximum benefit for the state?" she said.

Porter said the money donated by Resolution Copper and Rio Tinto has come in over several years and is a relatively small amount compared to the organization's operating budget, Porter said, adding that the donations and grants are tied to specific conservation projects and didn't influence the group's decision not to take a position on the land exchange.

Jennifer Russo, Resolution Copper's spokeswoman, said the company needed the expertise of conservation groups and the BLM to identify land that would be of value in exchange for Oak Flat.

"It's a bit like buying a home," she said. "What's a great home to me may not be a great home to you."

Russo also said that the company draws a clear line between its charitable donations and agreements with Superior and the Queen Creek Coalition in which the company has asked for support letters.

"Never ever is there a stipulation that we are seeking support in exchange for those donations," Russo said. "The money is tied to a specific business goals we might have for conservation or education."

7B Ranch, which contains one of oldest mesquite forests in Arizona, lies near the fragile San Pedro River. In 2007, Resolution Copper agreed to pay The Nature Conservancy $45,000 a year to manage the property, Russo said.

A call to The Nature Conservancy's Phoenix office was directed to the regional office in Colorado. Aaron Drew, a spokesman for the office, said Resolution Copper approached the group along with other stakeholders for help identifying parcels to be included in the land exchange.

Drew said in an e-mailed statement that The Nature Conservancy has been working with land owners, public agencies and corporations to protect, restore and manage San Pedro River for 30 years. He said the group's arrangement to manage 7B Ranch is one of many formal and informal partnerships it has to help preserve the area.

Bahr, executive director of the Sierra Club's state chapter, said that the relationships Resolution Copper cultivated with the Audubon Society and The Nature Conservancy allowed the company to give the impression that the groups support the swap.

"People have to be careful about the impressions they create," Bahr said. "It's not just what the positions of these groups are, it's how they can be characterized."
Next steps

Resolution Copper hopes to begin mining in 2020, but the legislation providing for the land exchange would need to be reintroduced when Congress reconvenes.

The latest version of the bill required an environmental analysis under the Natural Environmental Protection Act, consultation with Native American tribes and an appraisal of each parcel included in the proposed swap. But the new legislation may be different.

As the process drags on, Hing, Superior's mayor, said his community could be benefiting from the money it would receive from Resolution Copper.

"We'd like to make Superior last beyond 60 years and really bring in other economic drivers for our community," Hing said.

Meanwhile, rock climbers in the Queen Creek Coalition were expecting a final offer from Resolution Copper, Paul Diefenderfer said.

"If this is going to happen, let's make the best of it," Diefenderfer said. "In a perfect world we wouldn't have to do this, but there's a bunch of copper down there and we have to get copper somewhere."

Salisbury, who planned to retire in January, said Resolution Copper will continue pressing for the land exchange and working with stakeholder groups because the mine would be a boon not just for the company but for Arizona and the U.S.

"It's virtually impossible to please everybody, but we've tried to weigh all of that out and get as broad a consensus as possible," he said.