Hudbay Minerals Inc. has officially confirmed the news of receiving an Aquifer Protection Permit from the Arizona Department of Environmental Quality (ADEQ) for its Copper World project. Going by the available details, to achieve the same, Hudbay proactively engaged with the ADEQ, a process where it was able to generate a transparent and thorough permitting process through comprehensive and detailed information. All in all, the stated development makes for an important milestone in the advancement of Copper World, which is a standalone operation designed to produce 85,000 tonnes of copper per year over a 20-year mine life. Anyway, talk about three key state permits required for Copper World sanctioning, they involve Mined Land Reclamation Plan, Aquifer Protection Permit, and an Air Quality Permit. In Hudbay’s case, the Mined Land Reclamation Plan was initially approved by the Arizona State Mine Inspector during October of 2021. Subsequently, the plan was amended and approved to reflect a larger private land project footprint. Now, while the latter approval did saw a challenge in the state court, the whole attempt was dismissed in May 2023. Next up, we have the Aquifer Protection Permit, which the company has now received from the ADEQ following a robust process that included detailed analysis by the agency and Hudbay, as well as a public comment period which was completed in the second quarter of 2024. Moving on to the Air Quality permit, the application for it was submitted to the ADEQ in late 2022. Following a similarly robust process, this permit’s public comment period commenced in July and is scheduled to conclude in September 2024.
Coming back to Hudbay’s Copper World project, it is expected to be a meaningful copper producer across the U.S. domestic copper supply chain, which the country will bank upon immensely for securing its growing metal demand related to increased manufacturing capacity, infrastructure development, increased energy independence, and domestic battery supply chain and production needs. An example of the same would be how the “Made-in-America” copper cathode, set for production at Copper World, will be sold entirely to domestic U.S. customers and would make Copper World the third largest cathode producer in the U.S. Over the proposed initial 20-year mine life, Copper World will contribute more than $850 million in U.S. taxes, including approximately $170 million in taxes to the state of Arizona. Not just that, the project will also create more than 400 direct jobs and up to 3,000 indirect jobs across the area. In the latter regard, Hudbay will markedly offer competitive wages and benefits, as well as engage in partnerships with local apprenticeship readiness programs and community-based workforce training programs, including skilled and technical levels, to ensure optimal personnel quality in all positions. As a result, the company has already received support from several local unions, including The International Brotherhood of Boilermakers, Iron Ship Builders, Forgers and Helpers Local 627, The Laborers International Union of North America Local 1184, and The United Brotherhood of Carpenters and Joiners of America Local 1912.
“Copper World represents Hudbay’s next significant copper growth project and is expected to increase consolidated annual copper production by more than 50% from current levels,” said Peter Kukielski, President and Chief Executive Officer of Hudbay.
The permit in question delivers a rather interesting follow-up to Hudbay introducing, back during October of 2022, a three prerequisites plan (3P Plan) for a disciplined financial planning approach in Copper World’s case. These prerequisites included Permits, translating to having receipt of all required state level permits. The next P in line was for Plan. By that, the company referred to the completion of a definitive feasibility study with an internal return rate of greater than 15%. The last one was Prudent Financing Strategy, where you would have multi-faceted financing strategy, including a committed minority joint venture partner, a renegotiated precious metals stream agreement optimized for the current project, net debt to EBITDA ratio of less than 1.2 times, a minimum cash balance of $600 million, and limited non-recourse project level debt.
