Analyzing the Local Economic
Impacts of a Large Copper Mine:
Including Both Benefits and Costs
Thomas Michael Power
Research Professor & Professor Emeritus
Economics Department, University of Montana
Power Consulting
Missoula, Montana
tom. power@mso.umt.edu
The Attraction of Mining: An Offer Too
Good to Be Refused?
 Concentrated
wealth waiting to be extracted.
 High wage jobs.
 Tax revenues for local and state governments.
 Impact limited to relatively small mine site.
 Hard Times: Have to rebuild the area’s economic
base to escape the recession.
Summary Response: A Guide to My
Presentation
 Mining
will not be an important part of Greater
Tucson Area economic base in the future.
 Mineral deposits are not always “wealth”
 Mineral industry instability: booms & busts.
 Shrinking mining workforce: Technology.
 Significant environmental damage.
 That damage is not “aesthetic.” It’s economic
 Recession is short-run; environmentaleconomic damage is long-run.
Arizona and Pima County (Tucson)
Total Real Personal Income
$40,000,000
$35,000,000
$200,000,000
$30,000,000
$25,000,000
$150,000,000
Pima County
$20,000,000
$100,000,000
$15,000,000
$10,000,000
$50,000,000
$5,000,000
Arizona
Periods of National Recession
$-
$1969
1974
1979
1984
1989
1994
1999
2004
2009
Pima County Real Income ($1,000s)
Arizona Real Income ($1,000s)
$250,000,000
Tucson’s Actual Economic Base
Tucson’s Highest Rankings as Economic
Development Strengths
4. Cultural Diversity in the region.
6. Current image as a place for leisure, recreation, and entertainment.
7. Recreational & entertainment resources within the region.
8. Tucson region’s current image as a place to live.
10. Art and cultural venues in the region.
The Focus on Local Amenities

Public educational institutions

Cultural attractions

Natural Landscapes and Recreation Opportunities

Quality of Life: Lower key lifestyle

Sunshine

Urban amenities and access to even larger urban areas

Close Proximity to Mexico
What Is Not Listed: Metal Mining
Sources of Real Earnings: Tucson Area (Pima County) 2008
Agriculture
0.1%
Other Services
19.4%
Mining
0.8%
Maufacturing
12.0%
Construction
5.7%
Trade
9.8%
Health Services
13.6%
Transportation and Public Utilities
2.4%
Accomodations, Food, Arts,
Entertainment, Recreation
4.5%
State & Local Govt.
16.1%
Finance, Insurance, & real estate
4.8%
Federal Civilian
7.8%
Military
2.9%
Real Earnings In Mining : Pima County
Real Income (1,000s of 2009 $s)
$800,000
$700,000
Mining Payroll
$600,000
$500,000
$400,000
$300,000
$173 million
0.5% of Total
$200,000
$100,000
Pima County Total Real Income in 2008 = $34 billion
$1969
1973
1977
1981
1985
1989
1993
1997
2001
2005
Why the Focus on Amenities Instead of
Traditional Exports?
People care where they live.
 Businesses care where people live.

Available high quality workforce
 Markets for the goods and services produced

Attract high quality workers at lower cost.
 New residents setting up household stimulate the economy
 Attracting and Holding Retirees & Retirement income
 Attracting visitors: building a sustainable visitor economy
 Traditional exports do not explain local economic vitality.

Pima County Employment: Traditional Export and Local
Sectors
600,000
"Local" Sectors: The Rest of the Ecoomy: +370,000 jobs
Number of Jobs
500,000
400,000
300,000
200,000
Traditional Export Sectors: -1,500 jobs
100,000
Agriculture, Mining, Manufacturing, Military
1981
1986
1991
1996
2001
2006
Earnings in Export Sectors and Non-Employment Income: Pima County
$16,000,000
Total Non-Employment Income:
Investment, Federal Retirement, Income Support
Real Income (1,000s 2009 $s)
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
Retirement-Related
Non-Employment Income
$4,000,000
$2,000,000
Export Sector Earnings: Manufacturing, Mining, Agriculture, and Military
$1969
1973
1977
1981
1985
1989
1993
1997
2001
2005
Earnings in Export Sectors and Non-Employment Income: Pima County
$16,000,000
Total Non-Employment Income: Investment, Federal Retirement, Income Support
$12,000,000
$10,000,000
$8,000,000
$6,000,000
Retirement-Related Non-Employment Income
$4,000,000
$2,000,000
Export Sector Earnings: Manufacturing, Mining, Agriculture, and Military
20
07
20
05
20
03
20
01
19
99
19
97
19
95
19
93
19
91
19
89
19
87
19
85
19
83
19
81
19
79
19
77
19
75
19
73
19
71
$19
69
Real Income (1,000s 2009 $s)
$14,000,000
How Would the Rosemont Mine
Fit into This Amenity-Supported
Local Economic Vitality?
north
south
180 degree panorama view of the Rosemont Valley and Mine Site
Protected Lands Surrounding
The Rosemont Mine Site and
The Greater Tucson Area
*The reflecting pool is 2028 feet long
What Will the Public Get?: Jobs & Pay
The Magic of “Multipliers”

“Direct” Impacts: Actual Hires Mine Makes
 Construction Phase: 196 construction workers*
 Production Phase: 406 miners*

Rosemont: Total Jobs Including Multipliers
 Construction Phase: 3,600 person-years
 Production Phase: 2,100 jobs

Rosemont: Miners’ Pay: $50,000/yr
Secondary Jobs: $60,000/yr
*average jobs over construction and production phases.
High Paid Jobs?

Average mining jobs in Pima County pays $55,000/yr before
benefits in 2008.
Other pay levels used by Rosemont Study
Industry
Assumed Pay Avg. Tucson Pay
Manufacturing $300,000
$101,638
Retail
$ 54,000
$ 34,700
Information
$150,000
$ 69,300
Finance,Insur. $ 86,000
$ 43,200

(Pay includes estimated employer-paid benefits, ~23%)
Putting Rosemont’s Direct Jobs in Context
 196
construction workers; 406 miners
 520,000
jobs in Pima County
 Since 1970 Pima County added 10,000 jobs/yr
 UofA BBER projects gain of 7,300 jobs by end of
2011
 200
to 400 jobs is 1 to 2 weeks of normal job growth
 400 jobs is one job in 1,300 jobs. 0.08 percent
The Relative Importance of Rosemont Mine Projected Jobs
Source of Jobs
Direct Jobs
Multiplier
"Total"
Percent of Total Pima
Used
Jobs
County Jobs
Direct
Total
Rosemont Mine
406
5.2x
2,106
0.08%
0.40%
Pima County Travel Industry Jobs
22,770
1.5X
34,838
4.38%
6.69%
Total Pima County Jobs (2008)
520,444
1.0x
520,444
100.0%
100.0%
Relatively modest damage to the attractiveness of
the region to new businesses, residents, retirees,
or visitors could easily cancel out the “benefits” of
the Rosemont mine.
All Benefits, No Costs?
 No
serious environmental damage, unlike any
copper mine that went before it.
 Operation
of the mine does not displace workers in
any other businesses.
 Steady
employment; no interruptions in pay, unlike
any previous 20-30 yr. period.
Instability in Mining Jobs
 Cycles
of high prices stimulating production
followed by over-supply, low prices and mine shut
down.
 Labor-saving
technological change allows
production to rise while employment falls. Steady
reduction in the mining work force required.
U.S. Primary Copper Production:
1900-2009
Metric Tons of Copper
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
1900
1915
1930
1945
1960
1975
1990
2005
Arizona Copper Production and Employment
1,600,000
30,000
28,000 jobs
1,400,000 tons
or +86%
1,400,000
1,200,000
20,000
Copper Production
1,000,000
766,000 tons.
or -45%
800,000
15,000
751,500 tons
11,000
+86%
600,000
10,000
Copper Employment
400,000
5,000
5,900 jobs
-79%
200,000
0
1972
1977
1982
1987
1992
1997
2002
2007
Copper Employment
Copper Production (tons)
25,000
Declining Labor Intensity and Employment In Arizona Copper Industry
30,000
40
2003: 5,900 jobs
Employment in the Copper Industry
35
25,000
30
20,000
25
15,000
20
15
10,000
10
5,000
Workers per Thousand Tons of Copper Produced
1974: 35 workers per 1,000 Tons
5
2003: 7 Workers per 1,000 Tons
-
1972
1977
1982
1987
1992
1997
2002
2007
Labor Intensity of AZ Copper Production:
Jobs per Thousand Tons
Employment in AZ Copper Industrty
1974: 28,000 Jobs
Real Wages and Salaries in the Arizona Metal Mining Industry
2,000
$1.8 billion
1,600
1,400
1,200
1,000
$766
million
$885 million
800
600
$552 million
400
$429 million
200
20
09
20
07
20
05
20
03
20
01
19
99
19
97
19
95
19
93
19
91
19
89
19
87
19
85
19
83
19
81
19
79
19
77
19
75
19
73
19
71
19
69
Real Income (millions of 2010$s)
1,800
Rational Thinking about Mining:
Thinking Like a Mining Company

Not all mineral deposits are developed as soon as they are
discovered.


NE Minnesota copper know for over a century. Still undeveloped.
Rosemont copper was partially mined 1880’s-1951, abandoned.

Mining companies study the technologies available, the costs of
extraction and processing, and the value of the final product.

If costs are greater than the value produced justifies, the mineral
deposit does not get developed.
Rational Thinking about Mines

The public and regulatory agencies should take the same
perspective, but from a public cost and public benefit
point of view.

Do the benefits justify the costs?

If not, the public should do the same thing a mining
company would do, not allow public resources to be
invested in the development of the mineral deposit.
Rejecting a Particular Mine Is Not
Evidence of Being Anti-Mining

Mining companies regularly reject proposed mineral
developments because costs exceed revenue expectations.

We will not go with out copper if a costly mine is rejected.
We will turn to a less costly alternative. Hundreds of
copper deposits are proposed for development.

Consider the current revival of copper mining activity
across Arizona, North America, and around the world.
Rational Mine Site Selection

Location: Sensitive area? Other values dominate?

Technology being used: Size and extent of foot print; ease
of mitigation and complete reclamation?

Past history of copper mining is important.
Did it lead to prosperous, stable, vital economies?
 Was the natural environments left intact?
 What have been the costs to the public of repairing damage?

Conclusions-1

Be rational: look at both benefits and costs

Don’t be panicked by the recession. Mines do not cure recessions.
Recessions are 1 to 2 year cycles; mines operate 20 to 30 years with
their own deep cycles.

Take into account the instability that characterizes mineral
development. Arizona has plenty of experience with that.

Realize there are lots of alternative sources of copper. High-tech and
alternative energy will not be stalled by rejecting high cost copper
deposits.
Conclusions-2

Recognize that Tucson is not a “frontier” economy. It is a
sophisticated high-tech manufacturing and service
economy with a bright future.

You are not “desperate beggars;” You can afford to be
good “choosers” who seek to preserve what is most
valuable about this place you call “home.”

Natural landscape amenities are an important part of the
Tucson area’s economic base. This is not just an
“aesthetic” or “pretty playground” concern. It is a
dominant economic concern.
Thank You!
Questions?
Thomas Michael Power
tom.power@mso.umt.edu
What Is Not Listed: Metal Mining
Sources of Real Earnings: Santa Cruz County 2008
Other Services
8.4%
Health Services
2.6%
Accomodations, Food, Arts,
Entertainment, Recreation
3.6%
State & Local Govt.
14.6%
Agriculture
0.1%
Mining
0.0%Maufacturing
3.0%
Construction
3.1%
Trade
28.9%
Military
0.5%
Federal Civilian
22.3%
Transportation and Public Utilities
7.8%
Finance, Insurance, & real estate
5.1%
Santa Cruz County Employment: Traditional Export and Local
Sectors
18,000
16,000
"Local" Sectors: The Rest of the Economy: +8,500 jobs
Number of Jobs
14,000
12,000
10,000
8,000
6,000
4,000
Traditional Export Sectors: -675 jobs
2,000
Agriculture, Mining, Manufacturing, Military
1981
1986
1991
1996
2001
2006
Amado-Sonita-Patagonia-Tubac Zip Code Areas
Jobs Located in This Area
Wage and Salary Employment 2004
(Self-Employed Not Included)
Sector
Employment
Accommodations and Food Service
493
Government (including schools)
252
Trade: Retail & Wholesale
212
Construction
168
Other
138
Agriculture
122
Professional, Scientific, Technical
98
Educational Services
44
Real Estate
36
Health Service
33
Sub-Total: Jobs in the Local Area
1,578
Commuting Out of Area to Jobs
1,450
Total Employed Persons in Local Area
3,028
% of Local Jobs
31%
16%
13%
11%
9%
8%
6%
3%
2%
2%
100%