SW US CEO chat: Hudbay builds copper giant

Hudbay Minerals (TSX, NYSE: HBM) says it can build two of the largest planned U.S. copper mines without issuing equity, thanks to a financing package backed by offtaker Mitsubishi, streamer Wheaton Precious Metals (TSX, NYSE, LSE: WPM) and project debt.

The three-pronged strategy for Copper World — Mitsubishi’s $600 million, $230 million from Wheaton and roughly $500 million in debt — underpins a broader ambition to develop the project and the recently acquired Cactus without diluting existing shareholders. Hudbay would form North America’s third-largest copper district after operations controlled by Grupo México (BMV: GMEXICO) and Freeport-McMoRan (NYSE: FCX).

“We’re not going to issue equity, that’s for sure,” Hudbay CEO Peter Kukielski said by phone in mid-August from British Columbia.

“Cash flows from our current existing operations are very, very strong, so it puts us in a position not only to be able to build Copper World without looking to investors to contribute, but it puts us in a very, very good position to be able to advance Cactus on the tail of Copper World as well.”

If successful, the financing makeup reflects a growing trend among miners, while enabling the Arizona projects to lift U.S. copper production by about 20% by the early 2030s. The assets would make Hudbay the second biggest copper producer in the U.S. with around 250,000 tonnes of copper cathode produced annually.

Copper World, which is fully permitted for its first stage ahead of a construction decision this year, and Cactus are cornerstones of Kukielski’s plan to grow Hudbay into a 500,000-tonne copper producer by 2035. The output would also include the Mason project in Nevada and continued growth in Canada and Peru.

Arizona copper district

Rather than treating Copper World and newly acquired Cactus as separate developments, Hudbay plans to integrate them into a single operating district, Kukielski said. They would share equipment, procurement, operating expertise and infrastructure while sequencing their development to maximize returns.

“It’s a substantial move for us,” the CEO said. “It’s a very, very attractive potential district.”

Copper World, about 50 km southeast of Tucson, is expected to produce about 92,000 tonnes of copper annually in its first stage. Cactus, northwest of Tucson near Casa Grande, is designed to produce roughly 103,000 tonnes a year. Hudbay acquired it in June by taking over Arizona Sonoran Copper for about $1.48 billion.

The acquisition’s timing was deliberate, Kukielski said. Hudbay had been evaluating Cactus for several years and decided to buy Arizona Sonoran before it committed to major equipment, financing and development decisions so the projects could be planned as a single complex.

“We thought it was much better to move forward and get the project into our portfolio,” he said. “We certainly felt it was a project that would be desirable to many, many others. And so, yeah, of course, what we did was pre-emptive in a way.”

Copper World costs

Copper World remains on track for a definitive feasibility study later this year and a board construction approval before year-end. Analysts at CIBC Capital Markets and Scotiabank expect construction costs of around $2 billion compared with $1.5 billion in the 2023 prefeasibility study because of inflation, tariffs and scope additions.

“Despite higher capex, Copper World is an executable growth vehicle with attractive economics,” Scotiabank mining analyst Orest Wowkodaw said in a July 29 note. “We do not think investors should fear the impending Copper World update. With a fully de-levered balance sheet, the company is very well positioned to advance its next stage of growth.”

Kukielski said the project’s economics remain compelling and the company has been able to hire without problems from Tucson and Phoenix even as the wider industry grapples with a labour shortage.

“The project will be robust under any scenario,” he said, noting the company uses long-term copper prices in its economic models that are well below current spot levels. Spot copper recently traded as high as $6.80 per lb., a new record.

“We know that steel has gone up 200% for example, or 100% at least. But in some cases, some of the equipment pricing has gone down. It’s fair to say, though, that the numbers that you’re quoting are not entirely out of the realm of imagination,” he said.

“The definitive feasibility estimate is not going to be a blowout by any stretch of the imagination.”

Copper World’s 2023 prefeasibility plan also includes a second growth stage. Hudbay intends to add a concentrate leach facility in the project’s fourth year at an estimated cost of about $400 million, producing 70,000 tonnes of copper cathode annually from year five — half of its ultimate 140,000-tonne design capacity.

Wheaton Precious Metals has agreed to contribute $70 million towards the expansion under last year’s amended streaming agreement.

Cactus next

Hudbay doesn’t currently expect to seek a partner for Cactus, which Kukielski described as a simpler, lower-capital-intensity project than Copper World. Instead, the company plans to advance it after Copper World using cash flow generated from existing operations.

A key advantage of pairing the projects is that both ultimately aim to produce copper cathode in the U.S. rather than shipping concentrate overseas. Copper World’s cathode production comes after the planned concentrate leach expansion. The concentrate leaching circuit could generate sulphuric acid needed for Cactus’s heap-leach operation.

Arizona offers advantages that go beyond geology, Kukielski said. Both projects sit close to Tucson and Phoenix, avoiding the fly-in, fly-out workforce challenges common in more remote mining camps. The current U.S. regulatory environment also has become more supportive of new domestic copper supply, he said — though Hudbay has not sought federal funding because Copper World is already fully permitted on private land.

“We don’t think we need it,” he said. “If we need help eventually for phase two of Copper World when we move on to federal land, that’s when we’ll look to the government to provide support.”

Gold fuels growth

Not to be overlooked, Hudbay also has the Copper Mountain mine in lower British Columbia where the New Ingerbelle expansion is targeting a more than doubling of output to 60,000 tonnes copper within a few years. In 2025, it produced 23,784 tonnes of copper, 20,000 oz. gold and nearly 253,000 oz. silver.

Peru’s Constancia mine produced 85,155 tonnes of copper and 74,480 oz. gold in 2025, while the Snow Lake operations in Manitoba added 173,453 oz. gold and 9,249 tonnes of copper, with record precious metal prices this year helping fund the company’s U.S. expansion.

“We truly enjoy that gold exposure because it brings us a lot of stability,” Kukielski said. “Well, it used to be countercyclical with copper; now it’s running in tandem. So it’s just a source of incredible cash flow as you build out this portfolio.”

Hudbay would seem to have a full project pipeline for the time being, but the CEO says buying opportunities could arise. The company prefers North and South America, has explored in Chile, but is less interested so far in Ecuador and Argentina.

“We have always been very disciplined in how we approach acquisitions, and any acquisition we contemplate has to be accretive on a per share basis for our shareholders, and we’ll continue to exercise that discipline. But we would like to find something else, like another Copper Mountain, something we can sort of turn our unique skill sets to.”

The company has met or exceeded its forecasts for copper output for 11 years and now five years for gold, the CEO said. In Peru, the July start of Keiko Fujimori’s pro-mining administration aims to quell past socio-political issues and allow the company to focus on building in Arizona.

“People should look to Hudbay as being the next Canadian copper champion, apart from being the Southwest United States copper champion,” he said. “And we’re going to do it in a manner where we deliver exactly against what we say we will do.”