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.