Nevada leads the nation in gold production, #2 in toxic releases

by Brian Bahouth

The Coronado gold mine in north-central, Nevada - image - "Coronado 3/3" by Géologue is licensed under CC BY-NC 2.0

Reno – According to a recent release from the Nevada Division of Conservation and Natural Resources, Nevada mines produced 5.58 million troy ounces of gold in 2018, which is the largest amount of gold produced in any state over that period. Nevada mines were responsible for 5.4 percent of the world’s gold production in 2018 making the Silver State the fifth most productive gold producing region in the world behind the countries of China, Russia, Australia, and Canada. According to the United State Geological Survey 2019 Mineral Commodity Summary, Nevada is the leading non-energy mineral producing state in the nation. Copper, gold, lime, sand, gravel, and silver are mined in significant volumes in Nevada, and with gold consistently trading around $1,200.00 an ounce, the Midas-scale wealth generated from gold, silver, copper and other minerals taken from Nevada soil comes with a hefty environmental cost.

Image – Nevada Capital News

The Environmental Protection Agency (EPA) produces an annual report known as the Toxics Release Inventory (TRI). The EPA tracks the management of particular toxic substances that may pose a threat to human health. In general chemicals covered by the TRI Program focus on those that cause problems in three primary categories:

* Cancer or other chronic human health effects
* Significant adverse acute human health effects

* Significant adverse environmental effects

The current TRI toxic chemical list contains 650 individual chemicals and 33 chemical categories. When these chemicals are used in amounts above established levels, the company or agency using the substance must submit an annual TRI report on each chemical.

It’s worth noting that the TRI chemical list is by no means comprehensive and does not include all toxic chemicals used in the U.S.

Nevada Capital News ranked states by the release of listed substances per square mile, and Nevada ranks number 2 in the nation, narrowly behind Utah. Mining is all but the singular source of Nevada’s top 14 emissions of listed toxins to the air, water and land.

Image – Nevada Capital News
Image – Nevada Capital News

In detail: toxic emissions in Nevada

Of the top 14 toxic releases, except chlorine, mining was responsible for almost all of the toxic emissions in Nevada.

Arsenic Compounds  – 207,697,197 pounds
Lead Compounds – 62,430,484 pounds
Zinc Compounds – 28,656,265 pounds
Manganese Compounds – 31,940,516 pounds
Copper Compounds – 9,345,798 pounds
Antimony Compounds – 8,621,976
Vanadium Compounds – 6,330,688 pounds
Nitrate Compounds – 5,050,975 pounds
Chlorine – 4,801,405 pounds
Nickel Compounds – 4,100,078 pounds
Manganese – 4,076,582 pounds
Chromium Compounds – 4,015,391
Mercury Compounds – 3,133,711 pounds
Lead – 2,503,787 pounds

How much tax does the mining industry pay?

The Nevada Economic Forum’s most recent revenue projections for 2019, 2020, and 2021 expect to collect nearly $54 million in combined tax revenue each year of the next biennium. The $54 million number includes payments as mining taxes and the Modified Business Tax.

If the industry pulled 5.85 million Troy ounces of gold from Nevada in 2018, and gold is selling for roughly $1,200 an ounce, Nevada’s gold industry mined and processed nearly $7 billion dollars of gold in 2018.

In February of this year, the Canadian think tank Fraser Institute released their 21st Annual Survey of Mining Companies. According to the survey of 83 mining districts around the globe, due to Nevada’s industry-favorable mining tax mechanism, “Nevada is the most attractive jurisdiction in the world for mining investment.”

The Net Proceeds of Minerals tax 

The accounting mechanism by which the mining industry is taxed on minerals extracted from Nevada soil was established as part of the state’s founding and remains in the state constitution today. The special tax relationship the mining industry enjoys has rarely been challenged.

No other Nevada business sector has such a favorable system of taxation. In short, the Nevada net proceeds of minerals assessment weighs the value of the minerals sold along with the costs associated with removing it from the ground and making it into a form that can be sold. According to NRS 362.120, the balance between these two numbers is known as the “net proceeds of minerals” to which a 5 percent tax is applied. The tax is capped at 5 percent.

The mining industry is one of the most influential lobbies at work in the Nevada State Legislature with as many as 50 paid lobbyists twisting arms on the industry’s behalf during the 2019 legislative session.

The Nevada gaming industry pays a roughly 7 percent gross proceeds tax and other taxes while the mining industry enjoys an effective tax rate of roughly 1 percent on gross revenues.

The only challenge to the net proceeds of minerals method of taxation began during the 2011 legislative session.

Senate Joint Resolution 15 was a measure that, “proposes to amend the Nevada Constitution to remove the separate tax rate and manner of assessing and distributing the tax on mines and the proceeds of mines.”

The mining industry was forced to defend the 150 year old constitutional tax provision in the context of Nevada having one of the most famously under performing and underfunded school systems in the nation. SJR15 passed the legislature in 2011 and again in 2013 and became Ballot Question 2 on the 2014 statewide ballot.

Ballot Question 2 would have removed the 5 percent cap on the net proceeds of minerals but failed at the ballot box in an off-year election with historically low turnout by the narrowest of margins, 49.7 percent in favor to 50.3 percent against. The exclusive tax relationship the mining industry enjoys with the state of Nevada has not been meaningfully challenged before or since Question 2.

Nevada mines have steadily produced 5 to 5.6 million ounces of gold per-year for the past ten years. According to the Nevada Department of Conservation and Natural Resources, the primary domestic uses of gold in the US are: jewelry, 46 percent; electrical and electronics, 40 percent; and official coins, 9 percent.

Silver

USGS data shows that Nevada mines produced 8,011,408 troy ounces of silver in 2018, a decrease of 5.5 percent from the previous year.  The average annual price for a troy ounce of silver decreased from $17.04 in 2017 to $15.70 in 2018. Simple math for the 2018 Nevada silver yield is potentially worth some $125 million dollars.

Primary domestic uses for silver are for electrical and electronics, 36 percent; coins and metals, 22 percent; jewelry and silverware, 7 percent; and film, 5 percent

Copper

Nevada’s copper production in 2018 was 144.6 million pounds, less than 1 percent below the previous year’s production. The average price of copper in 2018 was $2.96 per pound.  Simple math for the 2018 Nevada copper yield is potentially worth some $428 million dollars.

Primary domestic uses for copper are: building construction, 43 percent; electrical and electronic products, 19 percent; transportation equipment, 19 percent; consumer products, 12 percent; and industrial machinery and equipment, 7 percent.