Early in my career at Rio Tinto, I was fortunate to spend time in Arizona working to turn around our foundry business in Tempe and Chandler. At that time, the state’s economy was anchored by the famous “Five Cs” – from copper to cattle. As a visitor from Australia, I was impressed by the clear commitment of civic leaders to create this base while also attracting a wider set of industries to build a diversified economy that provides sustainable economic growth.
Now, 20 years later, when I return as the chief executive of Rio Tinto, I am struck by the incredible strides the state has made to create a diversified economy and sharpen Arizona’s competitive offering. As a company with over a billion dollars invested in a copper project here, we are pleased that copper remains a source of strength for Arizona. However, the extent to which the state has also attracted new industry leaders in areas such as technology, finance and healthcare is impressive.
Rio Tinto is currently invested in Arizona through our Resolution Copper project outside the town of Superior in the Copper Triangle. While Resolution must first complete many years of regulatory review by the federal government before it will ever produce copper, its potential contribution to Arizona’s economy is significant. If approved by regulators, Rio Tinto expects to invest billions of dollars in the Resolution project over the next decade.
Over the project’s 60 year lifespan, it is forecasted to generate more than $60 billion in economic value in the state. Over 3,700 jobs will be supported by the project, including over 1,000 highly paid direct jobs that will generate over $220 million in annual wages. Of course the project will also create indirect employment for many more contractors, suppliers and other skilled workers. For comparison, it is estimated the February Superbowl in Glendale generated $500 million for the state – Resolution Copper has the potential to be the economic equivalent of two Superbowls per year for the next 60 years.
At a company like Rio Tinto, we have to invest and operate where the best minerals are located. We must also invest our shareholders’ money in places where we can generate the best returns. Geologists may find a spectacular resource, but it isn’t a sound investment if we can’t get the resource to our customers due to lack of infrastructure or arbitrary changes in the legal and regulatory environment. The quality of the operating environment is as important as the quality of the resource. When it comes to factors such as a clear legal environment, availability of skilled workers, world class academic institutions and dependable infrastructure, Arizona is a standout. Not just in the United States, but globally.
The fact that some of the most respected companies in the world: Apple, General Motors and Northern Trust, to name but a few, have decided to invest in Arizona recently is a clear indication of the quality of the business environment in the state.
On the international front, Arizona has been a leader in attracting international companies like Rio Tinto to “insource” capital and jobs in the state. According to the Organization for International Investment (OFII), Arizona ranks 8th in the nation in terms of insourcing jobs with over 83,000 Arizonans employed by 730 international companies.
Some label these companies “foreign” rather than global, but that ignores the fact that these companies create jobs locally, pay state and local taxes, and buy goods and services from local suppliers. Moreover, U.S. pension funds and individual investors are frequently significant shareholders in these companies that are headquartered abroad. It may surprise you to know that in Rio Tinto’s case, nearly 20 percent of our shares are held in the US.
Arizona is clearly succeeding at attracting global businesses to invest and create jobs. For good reason: Civic and business leaders have created a very attractive and competitive business environment. That doesn’t just happen; it takes cooperation among government officials, business leaders, academic institutions and civil society. As a global company that hopes to grow its presence in Arizona, Rio Tinto looks forward to playing a part in the civic partnership that has so ably guided Arizona’s continued growth and development.
– Sam Walsh is chief executive officer of Rio Tinto.