BHP, Rio Tinto’s new copper mine under threat

Mining giants Rio Tinto and BHP have a lot riding on this new venture, but now face a lawsuit from the indigenous community.

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BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO)’s joint venture has been hit with a lawsuit against its plans to build a massive copper mine in the US.

Resolution Copper, which is 55% owned by Rio Tinto and 45% by BHP, has so far spent more than US$2 billion to advance the project in Oak Flat, Arizona.

But non-profit advocacy group Apache Stronghold has this week started legal action to prevent the government from handing over 980 hectares of land, also known as Chi’chil Bildagoteel, to Resolution.

The lawsuit is the latest move in the San Carlos Apache native American tribe’s resistance to the proposed copper mine.

“Oak Flat is holy and sacred. Chi’chil Bildagoteel is central to our traditional religion and identity as Apache people,” said Apache Stronghold leader Dr Wendsler Nosie. 

“Giving away our sacred land by the US government for destruction by a foreign mining company destroys our ability to practice our religion. It violates our First Amendment right to the free exercise of our religion protected by the constitution.”

The Motley Fool has contacted Resolution Copper for comment.

Both BHP and Rio have a lot riding on this copper mine, which is projected to supply almost 25% of copper demand in the US for 40 years.

The lawsuit is looking to block the release of the final environmental impact statement on Friday US time, which would prompt the transfer of Chi’chil Bildagoteel to Resolution.

Rio Tinto’s relations with locals have been rocky

The Arizona headache comes after Rio Tinto endured a year from hell in 2020 over its destruction of the Juukan Gorge in Western Australia in May.

Rio Tinto initially stated it did nothing wrong, citing that all its actions were legal. 

But after pressure from its major shareholders about the cultural and historical significance of the site, 3 executives departed the mining giant.

Then earlier this week, Rio Tinto had to deal with a new crisis in Mongolia. The government there has threatened to pull the plug on its Oyu Tolgoi mine expansion project.

Ulaanbaatar was left “dissatisfied” with the economic benefits of the plans for the copper and gold mine. So much so that it would revoke the Oyu Tolgoi Underground Mine Development and Financing Plan (UDP), which was signed with Rio in 2015.

Rio’s subsidiary Turquoise Hill Resources Ltd (NYSE: TRQ) announced it would be “engaging immediately” with the Mongolian government to save the UDP.

Rio Tinto’s shares were down 1.75% at the time of writing. BHP was down 1.21%.

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Returns as of 15th February 2021

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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