US House votes to put royalties on hardrock mining

[Robb]

Source: Reuters

WASHINGTON, Nov 1 (Reuters) - The U.S. House of Representatives on Thursday voted to slap the first-ever federal royalties on gold, silver, copper, uranium and other minerals mined on public lands.

The House voted 244-166 for the Hardrock Mining and Reclamation Act of 2007, which would levy an 8 percent royalty on the gross revenue from new hard-rock mining activities and impose a 4 percent royalty on existing operations.

The White House threatened to veto the bill, warning that imposing royalties "could reduce the continued domestic production of hardrock minerals."

(snip)

Democrat Rep. Nick Rahall of West Virginia, the bill's chief sponsor, said reform is needed to end mining companies' ability to buy land for as little as $2.50 an acre, which amounts to "fast food hamburger prices."

Read more: http://uk.reuters.com/article/oilRpt/idUKN0154772920071101

---

-------
I can appreciate wanting to get the money to clean up old mines, but Rahall's ignoring that Congress has voted every year to extend the ban on patenting (that "buying" he's talking about) claims since the early 90s. Plus, an 8% royalty on gross, not net, profits?

I think this is short-sighted. Reform is good, but US mining operations that already pay on their incomes will see this as double dipping, and will simply not mine in this country, sending the enfironmental problem elsewhere. The fund they want to build will dry up before it gets off the ground. Gold's through the roof; it's only going to get more expensive if its only coming from overseas.

Plus, billing the existing mining operations for cleanup of old sites, which is essentially what this is, is like asking me to foot the bill for cleaning up my dead neighbor's yard. :shrug:

[robinlynne]

1. Why are public lands being sold for mining?

[Robb]

3. They haven't been, recently

There's two types of mining claims, patented and unpatented.

Unpatented claims are the most common, under the 1872 law a miner goes out on public land, finds something valuable, and stakes a claim on the minerals. He doesn't get any rights to the surface.

If a miner works his unpatented claim for a certain number of years, he can apply to patent it -- get the surface rights, as well. This means he could build a house on it if he wanted to. It's a drawn-out process, but it could be done.

In (IIRC) 1992* Congress put a one-year ban on patenting claims, and they've voted every year to renew the ban. Part of the language in this House bill makes that permanent, which is a very good idea.

*(On edit: it was 1994.)

[DCKit]

6. Not even sold, given away.

This is a long time coming.

[aquart]

2. No sane person would put a royalty on net, rather than gross, profits.

You could not possibly be that ignorant.

[Robb]

4. I could *so* be that ignorant!

:D

Seriously, mining's a high-risk, high-investment activity. I've watched a couple of old-timers re-open their mines out here, and it's labor-intensive on the small scale. To bring in an ounce of gold they'll spend about $500.

Even for a huuuuge gold mining operation, it's spendy. The Cripple Creek and Victor Gold Mining Company hit the 3 million ounce mark on its 14-year operation this summer; its operating costs are around $334 per ounce of recoverable gold.

With gold at $800/ounce, a $64/ounce royalty ain't a big deal to them. But to the small-timer that's all of a sudden a significant expense, and he'll probably get out of the game -- sell out to a bigger company who can absorb it.

Any tax that favors the big guy can't be a good thing. Especially with the big guys' records on the environment.

[harpboy_ak]

11. Royalty on net profits means NO royalty

Creative accounting would ensure that no mine would ever pay a royalty on net profits. The audits would cost far more that any royalty would be worth, and it would be underpaid, understaffed government auditors vs the most expensive and creative accountants the industry could buy. On overriding royalty on the gross value of the minerals extracted is the ONLY way to tax.

Believe me. The state of Alaska is going through this right now with the oil industry, who bribed a bunch of legislators back when Murkowski was governor and in their pocket, to change from a gross tax on oil extracted to a net tax, and guess what? The industry is now trying to deduct the expenses of fixing those gathering lines at Prudhoe that failed due to their criminal negligence (BP just plead guilty to same), as well as other "expenses", and the first year taxes were over a BILLION DOLLARS LESS than what had been predicted! Plus the state can't find enough auditors qualified to perform the needed audits!

The only royalty that makes sense is a gross royalty. If the mine is not profitable with that royalty, without putting up bonds for cleanup, and without any environmental shortcuts, then it should stay closed. Eventually the demand will get high enough that prices will rise enough to make it profitable.

In the meantime, that old family jewelry I've been holding onto continues to go up in value.

[John Q. Citizen]

5. Good, it's way past time for this. n/t

[hollowdweller]

7. Rahall has been working on this issue for years. Glad it finally is moving.

Basically besides being a giveaway of the taxpayers resources and the environmental aspect it makes it even harder for coal mining companies in the east to compete and results in MORE mountaintop removal mining in a race to keep costs down and stay compeitive.

Rahall is my congressman and I really like him!

[Sam Ervin jret]

8. cry me a filthy river, we do want you to clean up your neighbors yard..

we have lived with a whole history of "neighbors" skipping out on their bills.

Consider it a "fee" for all the giants of the mining industry of whose shoulders you will now be standing.

[troubleinwinter]

9. "cleanup of old sites" is vital.

"cleaning up my dead neighbor's yard." Many of our neighbors have been killed and their families and neighbors are still being killed for lack of clean up.

Not only are people still being sickened and dying because of the mess mining companies have left behind in your "dead neighbor's yard", uranium dust is blowing across the country and flowing into drinking water sources for many millions (the Colorado serves drinking water to Southern California, Las Vegas and Arizona).

Please read this recent thread. Read some links. I hope you can see the importance of cleaning up your "dead neighbor's yard" for the sake of the environment and the people living now and in the future, so that they may not be riddled with cancer and die young deaths, like your neighbor.

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=132&topic_id=3647800

[Robb]

12. If that's the concern, which is a good one,

...then make it apply to dirty mining methods. Not across the board.

If uranium's the issue, tax uranium miners. If cyanide leach mining is the issue, tax the guys that use that method to extract gold -- not the guys with picks and sluices and a dozen guys.

I've read the entire bill, and it's got (IMO) 80% good stuff. And some stupid stuff; even the cleanup funds are distributed in a way that helps the big polluters more than the little guy. And the big guys get 10 years to come into compliance.

Upthread it was suggested to let market forces drive the prices up and it'll be OK for the smaller operations. As if the larger companies won't find ways to keep the high-price market to themselves.

Since when is that progressive? I don't underestimate the importance of establishing a fund to clean up these old sites. I just don't think the language in this bill does it in a remotely equitable way.

My county has lived through big metal mining operations, and small ones. At the big ones, people die a lot. And the money leaves town. And the mess becomes a Superfund site. And the big investors are gone with a *poof*.

The small ones keep the money here, because they're local. And they hire locally. And they recognize the importance of keeping it clean, because their families live here.

I'm fearful that the only way Rahall could get this well-meaning legislation as far as he has is by inserting the corporate protectionist language in there. And sight of the goal has been lost. If you want to see small mining ops vanish, and leave only Wal-Mart-style conglomerates, this is the bill. Bush will knee-jerk veto this if he can, and if the Senate doesn't fix the language, I'm for once glad of it.

[burrowowl]

10. K&R

This is a 66 + 1 so Bu$h can't veto it, unless the Senate doesn't give it the same veto proof vote.
Pressure your Senators, this is important!