A gold dore bar produced at one of the Barrick mines. The bars can weigh upwards of 900 ounces and at today's prices, can sell for more than $1 million.
Jared Boyd

Nevada's Golden Child

Is the state's hardrock mining industry losing its grip?

  • The terraced walls of the Pipeline Mine pit near Elko, Nevada, part of the Cortez complex of three mines where Barrick expects to produce as much as 1.12 million ounces of gold.

    Jared Boyd
  • A miner is dwarfed by a truck used to haul rock from the Barrick pits.

    Jared Boyd
  • Barrick gold dore bars.

    Courtesy Barrick
 

Amid the suited throngs milling inside Nevada's State Legislature building in late February, Jan Gilbert looked like a wood sprite who'd wandered into a room full of bankers. With graying hair tousled about her shoulders and an effervescent smile, Gilbert held a clutch of miniature Canadian flags in one hand and a sheaf of papers in the other. Curious reporters and lobbyists buzzed around her; even an occasional legislator stopped by.

"So nice to meet you!" she'd say, rearranging her armload of props to proffer a flag and a paper printed with a "statement," as she described it, "from one of our Canadian mining shareholders." The message opened with hearty thanks to legislators "for coming to help strengthen the lock" hardrock mining has on Nevada's politics. It dismissed the state's massive gaming industry as "a poor relative" to the mining business, which is dominated by Canadian gold-mining firms Barrick Gold, Kinross and GoldCorp, and it celebrated the "sweetheart tax deals" the industry enjoys in Nevada.

"Even as we Canadian mining corporations made billions in your state last year, we got to pay next to nothing." And should anyone try to change that, "we'll rev up our mercenary army of lobbyists and crush anyone who stands in our way!"

"Nevada," Gilbert added, "has been so supportive of us!"

Gilbert, of course, is neither sprite nor shareholder, Canadian or otherwise. Instead, she's a co-founder of the Progressive Leadership Alliance of Nevada (PLAN), a coalition of labor, social justice and environmental groups working to shift Nevada away from its miserly libertarian foundations. She had come to this special legislative session to school whoever would listen about mining's stingy history in Nevada, where a sharp drop in revenues has blown an $887 million hole in the state's $6.9 billion budget. Inside the hearing rooms, state legislators, who typically meet a scant 120 days every other year, worked frantically through the $50,000-a-day emergency session, weighing whether to fire more state college professors or to send homeless psychiatric patients into the street. Meanwhile, Gilbert roamed the hallways, occasionally breaking character to offer her version of a fix: Make the $81 billion international gold mining industry pay more state taxes.

Not that Gilbert expected the legislators to abruptly pass any bold new tax laws. "They knew the miners would take them to court if they did that," she said, "and that would take too much time out of solving the dire problems we have." Instead, she was trying to build momentum for a measure PLAN hopes to put to the voters this fall. The "Fair Mining Tax Initiative" would end the state's constitutionally mandated "net proceeds of minerals tax," which allows mining companies to pay no more than a 5 percent tax on their profits. It would replace it with a minimum 5 percent severance tax, based on the gross value of the minerals severed from Nevada's ground. The organization needs 97,002 signatures before June 15 for a place on the November ballot.

"We've got large organizations signing on," Gilbert said. "The teachers are for it, the labor unions for it. Even the real strong anti-tax people, the people who say they don't believe in any kind of taxes, are for it. I've gotten signatures from people who say, 'Don't tax me. Tax them.' "

It's hard to know how accurate Gilbert's assessment is: In a Las Vegas Review-Journal poll conducted last spring, 46 percent of respondents opposed doubling taxes on mining; PLAN's proposal would raise mining taxes by a factor of seven. (Seventy percent of those asked supported a higher cigarette tax, however, and more than half would raise gambling taxes: People are always willing to tax sin.) But public opinion may have changed: Conditions in the state have deteriorated in the year since the poll was conducted. At the same time, the mining business, currently dominated by gold and reveling in the mineral's high prices, has boomed.

From 2000 to 2008, Nevada's mines pulled just under $31 billion worth of gold from the mountains; after deducting everything from the $5,000-apiece tires on their Brobdingnagian trucks to their pro-mining billboards, the entire industry paid over $201 million in taxes, distributed among the local counties and the state's debt and general fund. Had there been a 5 percent tax on the gross value of all the minerals extracted, those taxes would have amounted to more than $1.5 billion. In 2009 alone, a tax on 5 percent of the gross production of Nevada's mines would have brought in nearly $300 million -- one-third of the amount lawmakers were trying to scrape up to fill the hole in their current biennial budget, which ends in June 2011.

But on the first day of the special session, even the relatively anemic proposal to change mine tax rules from the state's scandal-haunted Gov. Jim Gibbons, R, was making lawmakers nervous -- and not just because Gibbons had damaged his already frayed credibility the night before, when a television news crew discovered his girlfriend hiding in the Reno airport bathroom as the governor got off the plane. Gibbons, a geologist and former lawyer for the mining industry, had asked the Legislature to consider halving the number of deductions a mining company can take, so that the state can raise another $50 million over the next two years. Legislators had actually considered a similar fix in 2009, but this time around, any mention of a mining tax prompted a change of subject.

"We do need to change how we're approaching mining, but there are legal and constitutional concerns about how (the deduction proposal) would proceed," said Senate leader Steve Horsford, a Las Vegas Democrat and former mining lobbyist. "So unless there are objections, we'll agree that this approach is not the right one."

Back out in the hallways, Gilbert observed that Horsford (who, through his spokesman, Dave Berns, declined to be interviewed for this article) "can't very well attack people who contribute so much to everybody's campaign. (The mining companies) are big supporters of Democrats. They give money to everybody." Gilbert even took some herself when she ran for the assembly in 2002. ("I got a $500 check from Barrick," she recalled. "It said: 'To our favorite liberal.' ")

Indeed, if you eavesdropped on the hallway conversations among lobbyists, legislators and reporters, you quickly learned that, whatever responsibility mining might assume for helping to solve the state's budget woes, it would not be laid upon the industry unilaterally by the governor or forced on it by the Legislature. It would be a solution that the industry's own lobbyists had a hand in drafting, and one to which the industry itself had benevolently agreed.

"I know the governor is eager -- and rightly so -- to put money in the system," said Nevada Mining Association President Tim Crowley. "But I don't believe it will be by taking away deductions from the mining companies. We wholeheartedly believe that's a precedent no business would tolerate."

Instead, Crowley offered, "The mining industry will participate in solving the state's problems." Just not by paying more taxes.

Nevada's Gloden Child
Jan Stabile
Jan Stabile
Apr 24, 2010 12:49 PM
As a native bore Nevadan living in Humboldt County, Winnemucca Nevada. I have seen firsthand both sides of the mining issue. As stated in the article the ore will not last forever. 20 years from now we will be asking what do we have to show for all the mountains of tailing piles, open pits with poisoned water, miles of roads cut into the landscape for test drilling, and mercury tainted rivers and lakes. Keep in mind that the vast majority of the gold went into jewelry production not into currency or for industrial needs. With any down turn in mining we will suffer with lower home prices and higher unemployment just as we did in 1999, but we managed before the mining boom and we will have to adjust once the ore runs out. The people of Nevada must consider this a fair trade.
Canada's *Golden* Child
Moe Badderman
Moe Badderman
May 08, 2010 11:31 PM
Taxes will not be increased, Canadian mining companies have the sweetest deal here in Nevada that money can buy, and the politicians in their pocket are more crooked than the casinos and their owners ever were.