(Adds statement from Rio Tinto)
By Ernest Scheyder
March 1 (Reuters) - The U.S. Forest Service on Monday blocked a land swap sought by Rio Tinto Ltd in Arizona for its proposed Resolution Copper mine, dealing a serious blow to the project and a major win to Native American tribes.
The agency reversed a decision made in the waning days of former President Donald Trump's administration. The move comes less than a week after Tom Vilsack was sworn in as secretary of the Department of Agriculture, which oversees the Forest Service.
In 2014, then-President Barack Obama signed a Pentagon funding bill that approved Rio Tinto's proposal to exchange land for another parcel near the copper deposit, with the caveat that the swap could not occur until an environmental report on the mine was published. The Trump administration published that report on Jan. 15, clearing the way for the exchange within 60 days.
The Forest Service on Monday rescinded that publication and blocked the land swap.
The company and partner BHP Group Inc have spent more than $1 billion on the project already, though they have yet to obtain permits or produce any copper, a metal used in electric vehicle batteries. If developed, it would supply a quarter of U.S. copper demand and generate more than $280 million in annual taxes.
Rio Tinto said it was evaluating the Forest Service's decision. "In the meantime, we will continue to engage in the process determined by the U.S. government and are committed to ongoing consultation with Native American tribes and local communities," said Rio spokesman Matt Klar.
BHP did not respond to requests for comment.
Arizona's San Carlos Apache Tribe has long objected to the mining project because it considers the land home to religious deities.
"This is the right move," said Terry Rambler, chairman of the San Carlos Apache. The environmental report "was being used to justify trading away our sacred land to further enrich wealthy foreign mining companies." (Reporting by Ernest Scheyder; Editing by Cynthia Osterman)