The City of Globe recently announced it had renegotiated a deal with Freeport-McMoRan, Miami, Inc. (FMMI) to sell treated wastewater for use in mining operations.
The deal was originally made in 1983 with FMMI predecessor Inspiration Consolidated Copper Company and paid the city $1 for 500 acre-feet of processed effluent annually. That deal expired in 2013, but FMMI exercised the first of three 10-year extensions. If it would have chosen to use all of the extensions, the original deal would have lasted until 2043.
But the city began to ask for increased compensation due to the value of wastewater in an area that has significant water demands and few resources, particularly with the drought conditions that exist.
“They wanted a reliable source so they can count on an assured water supply,” Globe City Manager Paul Jepson said. “We were saying ‘this isn’t fair’ and started negotiations in 2016.”
Under the terms of the new agreement, Globe will supply 500 acre-feet per year of treated wastewater that “meets discharge quality standards established for surface water discharge under their current Arizona Pollution Discharge Elimination System (AZPDES) permit, for a firm 50-year period.”
FMMI will pay $180 per acre-foot with an adjustment every five years based on the Consumer Price Index. The company also paid a lump sum of $45,000 for the previous 6-month period once the deal was signed in early May.
The mining company also paid for and built all the necessary infrastructure for the discharge flows from the Pinal Creek Treatment Plant, the “Pinal-to-Kiser Pipeline.” The city will monitor flows to verify water usage and guarantee accurate payment.
Ultimately, the deal will add about $95,000 a year to the city’s coffers, although city leaders have not established where the money will fit in the budget. Jepson said that will be determined in future budget negotiations.
“It’s going to be a revenue generator.,” he said “If Globe grows, we have the option to sell anything over 500 acre-feet. But we don’t have the infrastructure or a buyer at this time.”
Jepson said the dealing was amicable from the start, but that it took so much time because “we were both overambitions on how fast our attorneys could pull this together. It took more time because it was complicated, but not because of disagreements. Both sides knew we could walk away if we wanted to, but we both felt the agreement was beneficial to each of us, so we kept going and got it done. Everyone [came away] happy.”
Either party can terminate the deal at any time “upon mutual written notice of agreement to terminate by both parties.”
FMMI can also build additional pipelines at no cost to the city, although it is under no obligation to do so.
“Freeport-McMoRan and the City of Globe worked cooperatively to conclude a win-win agreement, providing mutual benefits to both parties Freeport-McMoRan Director of External Communications, Eric E. Kinneberg, wrote in an email. “The City of Globe will now receive annual revenues from us for the continued rights to utilize the effluent, partially satisfying our water requirements. This collaboration reflects our commitment to engage with communities where we operate and to develop solutions to issues in which both the community and the company have common interests.”