NEW YORK Newmont Mining Corp. and Nevada Copper Corp. have voiced concerns over how potential tax increases would hurt both the mining industry and Nevadas overall economic health.
The Nevada Senate voted April 1 to repeal tax protection for mining companies in the state. For a tax increase to be implemented, two-thirds of the legislature first need to approve the removal of the tax protection, and then the proposal has to be placed on the 2014 ballot.
In theory, this means tax increases wouldnt hit Nevada mining companies until 2015 at the earliest, Tim Dyhr, Nevada Copper vice president of environment and external relations, told AMM.
However, the senates vote has put both Vancouver, British Columbia-based Nevada Copper and Denver-based Newmont on alert. The companies, along with the Nevada Mining Association, are already meeting with state officials to try to ensure that the mining industry doesnt get slammed with tax increases.
Dyhr said the mining industry will "engage in an active campaign to convey to the public why this is bad tax policy. Its not a good tax policy to single out one industry just because theyre doing well, and hope that they solve all of the states problems."
"We are committed to working with the states leaders to develop a long-term solution to Nevadas revenue needs in a way that doesnt link the states fortunes with the success or failure of a handful of industries," a Newmont spokesman said.
The Nevada Mining Association is "generally taking the lead on this" and has "mining representatives in the legislature every day to monitor whats going on and meet with officials," Dyhr said.
The Nevada Mining Association did not return requests seeking comment.
Even faced with the proposition of higher state taxes, Nevada Copper said it has no intention of halting its Pumpkin Hallow copper development project, which has an estimated 24 billion pounds of copper reserves and is on track to begin production in 2015, Dyhr said. "Obviously were concerned about tax increase proposals. But we have absolutely no intention of putting the project on hold."
At the moment, in addition to the normal state taxes, mining companies in Nevada pay an added industry-specific tax of 5 percent. While the gaming, banking and insurance industries also pay industry-specific taxes, Newmont estimates the mining industry pays more than $24,000 per employee annually to the state, while the gaming industry pays $9,000 in state taxes per employee and the state average is $6,000 per employee.
Newmont also estimates that the mining industry employs 1 percent of the states work force, generates 4.4 percent of the states economic output and pays 8.3 percent of total taxes.
While both companies agree that the state needs to come up with alternative ways to raise moneyNevada was hit particularly hard during the last recessiontax increases on the mining industry is not the answer, they said.
"The recession hit the gaming industry hard and housing felt the ripple effect (in Nevada)," Dyhr said. "The shining star is mining. So (state officials) think, lets go for the golden goose. But it would have a negative effect on the industry ... and eventually diminish the economic value the industry is pumping into the economy."
Newmont said the new tax system should resemble "other states, where all industries, not just four, are required to pay broad-based business taxes."
Newmonts Nevada operations include 14 open-pit and four underground mines and 14 processing facilities for copper, gold and silver.