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?

  • 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
  • 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
 

Page 3

"The background of Nevada politics," wrote historian Richard Gordon Lillard in 1942, "was for 30 years a fight of mine operators against paying taxes." Nevada took its first stab at regulating mining in 1861, just a few years after Henry Tompkins Paige Comstock laid claim to a vein of silver ore under Virginia City, and miners swarmed in to work the Comstock Lode. The first governor of the Nevada Territory, James W. Nye, needed a small police force to control the boisterous new crowd of mostly young men, and expected to pay for it with tax on the mines' gross production. But then as now, mining interests held sway over the Legislature; a tax on net profits, with all expenses deducted out, was the best Nye could get.

The issue resurfaced in 1863, when Nevada made a bid for statehood and drew up its first Constitution. As University of Nevada Las Vegas professor Michael Bowers explains in The Sagebrush State: Nevada's History, Government and Politics, once it gained statehood, Nevada would lose its substantial federal subsidy, and so it needed to seek out new sources of funding. A battle ensued: On one side was politician John North, who argued for a property tax on mining claims; on the other, mining lawyer William Stewart, who said mines should be taxed only on what they produced, since not every mine developed proved successful. The pro-tax faction prevailed in the Constitution.

That first Constitution, however, was rejected by four-fifths of the territory's 11,000 voters, many of whom likely worked in mines or were digging up their own claims and submitting samples to assayers. At least one delegate to the state's constitutional convention blamed its failure entirely on the mining tax.

The next year, after Nevada was granted statehood, Nye tried again. The document that emerged from the second constitutional convention taxed mines based on their net proceeds. It passed easily and was ratified in 1865. Seven years later, the federal government solidified the industry's rights with the General Mining Act of 1872, which declared mining the "best use of the land," and afforded it every privilege, from the right to exploit claims on other people's property to leaving behind a mess with absolute impunity. The law still allows hardrock miners to lease public land cheaply, take from it what they can, and pay no royalty to the federal government.

The 1872 Mining Law, like the Homestead Act of 1862, was written to settle the West, just as Nevada's Constitution was written to encourage its mining entrepreneurs. Since that time, however, the scattering of ephemeral rural outposts that came and went with available resources has grown into a state in which 85 percent of its 2.6 million residents cluster around the cities of Las Vegas and Reno. The old-time rough-and-ready miners have been squeezed out by global corporations. And yet efforts to modify the 1872 law have met fierce bipartisan resistance, most recently from Nevada's Democratic senator, Harry Reid, who, as majority leader, explicitly stands in the way of mining law reform.

"We've got to work out what (the mining industry) wants, and I will take care of them," the senator, a miner's son, said in a speech last month. In other words, a bill that West Virginia Democratic Congressman Nick Rahall introduced in the House last year, to impose an 8 percent royalty on the gross production of hard-rock minerals taken from public lands, doesn't stand a chance.

But Reid's position is perilous these days. Some polls show him 15 points behind Republican contender Sue Lowden in the 2010 Nevada Senate race, and at least 5 points short of beating anyone else. If he loses, mining's influence may well decline in Washington, D.C. According to David Damore, an assistant professor of political science at the University of Nevada at Las Vegas, it is finally beginning to diminish in Nevada. "This is the first time in the decade that I have been here that politicians and opinion leaders have openly questioned the industry's privileged position," he says. "Reading the tea leaves and thinking about the huge budget hole the state is facing in the next biennium suggests that things may change."

"We're not a bunch of Canadians!" Lou Schack, a spokesman for Toronto-based Barrick Gold, lives in Elko, in the heart of Barrick's Nevada territory. The corporation operates mines in Africa, Argentina and Australia, and has five properties, including its Goldstrike mines on the prolific Carlin Trend, within 100 miles north or south of the I-80 corridor in northern Nevada. As Executive Vice President of Exploration Alexander J. Davidson told shareholders three years back, this state is the company's "key focus."

Sitting around a conference table eating lunch, with muddy boots and self-rescue canisters from a just-finished mine tour piled around the room, Schack gives the assembled geologists, safety supervisors and Cortez Hills Mine's general manager, Joe Dick, a chance to discuss their regional bona fides. One was born and raised in Elko, another drifted around Montana and Utah before coming to work for Barrick. Joe Riney, a visitor from the Nevada Mining Association in Reno, recently moved out from San Francisco, and worried Reno would be too small. But he's heard so much good stuff about Elko that he's looking for a way to relocate again. "I can't believe it myself," he says. "I'm looking at an even smaller town."

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