Hudbay Minerals (TSX, NYSE: HBM) and Japan’s Mitsubishi have approved construction of the $2.1-billion (C$2.9 billion) Copper World project in southern Arizona despite a 59% surge in construction costs.

Scope changes since a 2023 prefeasibility study have resulted in $200 million of additional capital costs, Hudbay said Wednesday in a statement. Hudbay expects to contribute about $500 million, less than one-quarter of the initial investment, with its first installment deferred until 2028. Capital costs were previously estimated at $1.3 billion in the 2023 study.

“The Copper World sanction decision is a positive step towards Hudbay’s medium term growth plans, although the share price reaction may be limited as the scope of the project and initial capex estimates are largely as expected,” RBC Capital Markets mining analyst Sam Crittenden said Wednesday in a note.

The move, which follows the completion of a definitive feasibility study (DFS), clears the way for one of the largest new copper mines in the United States to start producing in the second half of 2029. Copper World, located about 50 km southeast of Tucson, is expected to help double Hudbay’s consolidated annual copper production to about 250,000 tonnes, alongside growth initiatives at the company’s existing operations.

Hudbay shares rose 0.2% to C$33.34 Wednesday morning in Toronto, valuing the company at about C$14.8 billion ($10.6 billion). The stock has traded between C$20.26 and C$44.48 in the past year.