The U.S. Environmental Protection Agency is recommending denial of Rosemont Copper Company’s Clean Water Act permit application pending before the U.S. Army Corp of Engineers.
The EPA states that Rosemont’s proposed wetlands mitigation plan to compensate for the loss of jurisdictional waters of the United States is “insufficient to avoid ‘significant degradation’ of the aquatic ecosystem.”
The federal water permit is necessary before construction can begin on the proposed massive open pit mine south of Tucson. Rosemont Copper is owned by Vancouver, B.C.-based Augusta Resource Corporation.
“Based on the information currently available, (Rosemont’s) permit application does not appear to comply with (federal clean water protection guidelines) and should not be permitted as proposed,” Jane Diamond, EPA Region IX’s water division director states in the letter to Col. Kim Colloton of the U.S. Army Corps of Engineers.
The EPA’s objections to issuing the Clean Water Permit could deliver a fatal blow to the proposed copper project because the agency has veto authority over Clean Water Act permits issued by the Army Corps.
The EPA’s latest objections to Rosemont’s Clean Water Act permit application comes at the same time Augusta Resource is running out of cash and borrowing money from investors and officers to meet its financial obligations.
The proposed Rosemont copper mine in the Santa Rita Mountains on the Coronado National Forest southeast of Tucson would impact the U.S. Bureau of Land Management’s Las Cienegas National Conservation Area and Pima County’s Cienega Creek Natural Preserve.
The EPA notes that the “Las Cienegas NCA was established by Congress and the President, in large part, to conserve, protect and enhance the unique and nationally important aquatic, wildlife, vegetation and riparian resources such as those in the Cienega Creek watershed.”
The BLM has also warned in comments submitted to the U.S. Forest Service in response to an administrative draft of the Final Environmental Impact Statement for the mining project that it intends to defend its water rights at the national conservation area that could be impacted by the proposed mine.
“BLM does not relinquish existing BLM surface and groundwater rights,” the agency repeated six times in its comments on the preliminary FEIS.
The EPA states the mile-wide, half-mile deep open pit will act as a hydrological sink that will draw down ground water levels that support wetlands, marshes and streams in the conservation area.
“The pit will permanently reverse the natural direction of groundwater flow toward and into the mine pit, and away from the sensitive aquatic habitats in Las Cienegas NCA and Cienega Creek Natural Preserve,” the EPA letter states.
The agency states none of Rosemont’s three proposed mitigation projects meet regulatory guidelines to be considered as compensation for the damage done by the mine.
“To EPA’s knowledge, no compensatory mitigation plan compliant with the regulations has been prepared to date,” the agency states. “EPA finds the proposed mitigation grossly inadequate to compensate for the mine’s impact.”
The EPA’s latest letter “reaffirms” the agency’s concerns about Rosemont’s proposed habitat mitigation monitoring plan that were first addressed in a Jan. 25, 2013 letter to the Corps, which concluded: “In summary, we believe implementation of the (mitigation plan) would fail to fully compensate for the project’s impacts to regulated waters.”
Augusta cannot access $106 million from its joint venture partner, Korea-based United Copper & Moly, and $225 million pledged by Silver Wheaton in a metals streaming agreement until Rosemont has obtained the Clean Water Act permit, according to Augusta’s regulatory filings.
Augusta reported less than $750,000 cash at the end of the 3rd Quarter on Sept. 30 and was forced to sell $10 million in convertible bonds to its chairman, Richard Warke, and to Ross Beaty, a major shareholder. Augusta is spending approximately $2.5 million a month and has more than $5 million in accounts payable.
Augusta is also facing repayment of an $83 million loan, plus interest, that comes due in July. Augusta has pledged all of Rosemont Copper’s assets as collateral for the loan from RK Mine Finance Trust I.
In a press release issued moments after the market closed Wednesday, Augusta said an additional $26 million loan from RK Mine Finance is pending upon “signing of final documentation”. If approved, Augusta must repay the entire $109 million loan by Oct. 21, 2014.