By M. Louis Arin, Ph.D., Jean M. Arin, Ph.D.

Since the beginnings of our country until today, the hard-rock mining industry, which extracts minerals such as gold, silver and lead, is considered a privileged industry by both the Federal government and the State of Nevada. The Federal General Mining Act of 1872 was instituted to encourage the development of the western frontier of the United States. The Act declares that anyone can mine for free on public land, with no government royalties and the land can be purchased for $5 per acre or less.  General Mining Act of 1872 was so successful that the generated fortunes from the silver and gold mines became the fiscal bases and incentives for the founding of San Francisco and Nevada.

The original goals of settling the West have been achieved and even surpassed, yet the Federal General Mining Act of 1872, remains in place today without any review or change. Is it because the financial and political power developed by the mining industry still makes legislation for change so difficult?

The mining interests financial and political power was demonstrated in the early history of Nevada when the mining interests held up for 10 months the ratification of the Nevada State constitution, necessary for statehood. The mining industry wanted a net proceeds tax on earnings to be included in the state constitution, not a gross tax. A draft of a new constitution was drawn up with a provision taxing only the net proceeds of mineral sales which is what the industry wanted. Thus, Nevada became a state on October 31, 1864.

One result of the net proceeds provision, is that over the last eight years, the Nevada mining industry has deducted 79 percent of the value of gold production, and paid taxes only on the value of the remaining 21percent. From 2000 through 2007, the mining industry in Nevada extracted and sold gold worth $25.5 billion, and paid taxes to the state general fund totaling only $125.3 million, an effective gross state tax rate of 0.5 percent. Wouldn’t that be wonderful for all of us, if we had that tax rate?

The debate, like a resounding drum beat continues today. Is it fair to keep the low tax rate on mining in place when other small and large businesses and citizens in the nation, are contributing, percentage wise substantially more in taxes?

We understand and appreciate that taxes are collected to pay for public roads, schools, police, jails, public health institutions, etc. Experience shows that whenever there is an additional burden on society, special taxes are levied, as in the case of the licensing of heavy trucks and motor vehicles that travel our roads.  Unfortunately, the mining operations on public lands have generated significant additional burdens on society while successfully avoiding being assessed for them. These same burdens continue and include:

• Enormous open pit mines that require extensive landscaping after the cessation of the mining operations. The miner with pick and ax mining for gold or silver is long gone along with the seams and nuggets of gold and silver. Today, almost all the gold in Nevada is drawn from enormous open pit mines, which can be seen by satellites in space, and cyanide heap leaching recovery operations. In the cyanide heap leaching process, tons of ore with flecks of gold, as little as 0.15 ounce of gold per ton of rock, are excavated, milled into a fine powder, treated with cyanide solutions and roasted to remove the toxic mercury in the ore. The massive mining operations and processes bring new hazard potentials for environmental damage including accelerated acidic runoff, accidental waste releases, and leachate that can and do infiltrate waterways and aquifers. 
  

• Mercury contamination of the environment requires continuous control and treatment. Mercury is a heavy metal that fouls the environment. The smokestacks of the roasting ovens from a cluster of gold mines near Elko, Nevada account for as much as 11 percent of the nation’s total mercury emissions. Mercury exposure is linked to neurological and kidney diseases, loss of motor control and death. At greater risk are pregnant women and young children especially.

Abandoned Mines

Listed in an U. S. Department of Interior’s Inspector General Report, there are at least 47,000 abandoned mines in California alone that are shown to be linked to the death of 12 people between 2004 and 2007. The identified sites may also contain dangerous levels of mercury, arsenic and lead. With the growth of the population and the increased use of off-road vehicles in the West, an increase of deaths and injuries is a strong likelihood. It is estimated that there are at least 500,000 abandoned mines across the nation. The estimated cost of clean up is at a minimum of $50 billion! And the value of a human life-who can put a number on that?

Politics of Mining

The mining corporations give substantial sums of money to the political campaign funds of state and federal legislators who block any legislative remedy for the societal burdens created by the mining industry.  In the rural areas, the main employer IS the mining industry. Of great concern is the hardship to residents, if suddenly the mining operations moved because of increased fees and/or enforced environmental changes or new regulations. One way to reduce community hardship is to have the mining corporation pay a royalty to a required Land Restoration Fund that would be paid even if the company declared bankruptcy.

Comments on the Privileged Industry

Geology Professor, Johnnie N. Moore, University of Montana, Missoula sums up the situation:

“If gold rises in price it is bad news for both the environment and the tax payer. I don’t know of any mine anywhere that doesn’t have water quality problems. And I don’t know of any closed mines anywhere, even new ones, that don’t have tremendous long-term problems that are going to saddle the taxpayers with cleanup and monitoring and remediation methods for perpetuity. That’s not a very good industry, in my view -- one that you have to pay for the product forever.”