Adds BHP statement in paragraph 16

By Ernest Scheyder

April 17 (Reuters) - The Trump administration said on Thursday it would approve a land swap needed for Rio Tinto RIO.L and BHP BHP.AX to build one of the world's largest copper mines, despite concerns from Native Americans that it would destroy a site of religious value.

The move is likely to escalate tensions between Indigenous groups vocal about the need to preserve historical lands and Western governments eager to boost critical minerals production and offset China's sector dominance.

The U.S. Forest Service, which is part of the Agriculture Department, said it will republish within 60 days an environmental report needed for the Resolution Copper project land swap to occur.

Congress and then-President Barack Obama approved the mine in 2014 after it was added at the last minute to a must-pass military funding bill with the condition that an environmental report be published.

The underground mine - which President Donald Trump approved in his first term before successor Joe Biden reversed him - would supply more than a quarter of U.S. appetite for copper and be a key part of Trump's plan to boost U.S. mining.

Copper is used in construction, transportation, electronics and many other industries. The United States imports roughly half of its copper needs each year.

Yet the mine's construction would cause a crater that would swallow the Oak Flat site where Arizona's San Carlos Apache worship. That has fueled strong opposition from all but one of the state's 22 Native American tribes, as well as the National Congress of American Indians.

Apache Stronghold, a nonprofit group comprised of the San Carlos Apache Tribe and conservationists, asked the U.S. Supreme Court last September to block the land swap. The court has not yet decided whether to take that case.

Were the court to do so, however, the Forest Service said on Thursday it "may reevaluate how to proceed" regarding the land swap.

"The U.S. government is rushing to give away our spiritual home before the courts can even rule, just like it's rushed to erase Native people for generations," said Wendsler Nosie, an Apache Stronghold leader.

The group and their attorneys at the Becket Fund for Religious Liberty contend the government would be violating the First Amendment's guarantee of freedom of religion if the mine is developed.

"This makes the stakes crystal clear: if the court doesn't act now, Oak Flat could be transferred and destroyed before justice can be served," said Luke Goodrich, a Becket attorney.

Representatives for the San Carlos Apache were not immediately available to comment.

Rio Tinto said the move was a "positive step forward" and it would continue to work on the project, on which it and BHP have already spent more than $2 billion. They have yet to produce any copper.

"The Resolution Copper mine is vital to securing America's energy future and infrastructure needs with a domestic supply of copper and other critical minerals," said a Rio spokesperson.

BHP, which owns 45% of the project to Rio's 55%, said "Resolution has committed to maintaining open dialogue with the local community and Native American tribes to advance the project responsibly."

The Forest Service's move was applauded by Mila Besich, the Democratic mayor of Superior, Arizona, the town closest to the Resolution project.

"This is a milestone in a very long process," said Besich. "This is a good thing for our town."

Rio has said it plans to keep all of Resolution's copper inside the U.S. should the mine be approved. The company controls one of the two U.S. copper smelters.

(Reporting by Ernest Scheyder; Editing by Sandra Maler, Rod Nickel and Franklin Paul)

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