Proposed mining royalty criticized

ELKO -- A proposed 8 percent royalty would cripple the nation's mining industry, which already is vulnerable to vagaries of the commodities market, members of a congressional subcommittee were told Tuesday.

Rep. Jim Costa, D-Calif., chairman of the House Subcommittee on Energy and Mineral Resources, and Rep. Dean Heller, R-Nev., met with about 200 people to discuss the proposed Hard-rock Mining and Reclamation Act of 2007, which includes the fee.

The legislation, sponsored by Rep. Nick Rahall, D-W.Va., would overhaul the General Mining Law of 1872. Backers say that for 135 years hard-rock mining companies have avoided royalties on gold, silver, copper and other minerals taken from public lands.

Opponents of the legislation believe production would fall off and funding for exploration to sustain mining and mining communities would go away if companies were compelled to pay the fees.

"You need to work with the existing framework because an 8 percent royalty is a gross injustice," said Russ Fields, head of the Nevada Mining Association. "It's not fair to mining or the public because mining has no control over the price of minerals, so it's impossible for mining to pass on the cost of the fee to the customer."

Costa said he brought "fresh ears and eyes" to the debate, adding that he held the hearing in Elko, center of major U.S. mining activity, at the request of Senate Majority Leader Harry Reid, D-Nev., to better understand the issues and contributions by mining to the economy and to national security.

In Elko for two days, Costa on Monday toured underground and open-pit operations on the Carlin Trend about 25 miles west of this eastern Nevada community.

Costa said that although the 1872 law has not been significantly altered for 135 years, Nevada has been "very progressive" with reforms of its own to help protect the environment. He added that Nevada's mining interests would be heard as Rahall's plan advances.

Costa also said the goal of Rahall's act is to generate reclamation funds to clean up abandoned mines in the West; raise environmental standards and help preserve hunting areas and fisheries; and create a stable environment for the mining industry.

Reid said environmental groups have caused the mining industry to "live in a political wilderness" for years.

"It can't be their way or no way. We have to reach a compromise," the Senate majority leader added.

Reid added that some revisions to the mining law are needed if for no other reason than to end uncertainty for the industry. If Congress doesn't act, he said the issue is left in the hands of whoever is president.

Heller said the legislation would hurt Northern Nevada, a region he said "represents the best of the mining industry" in terms of the availability of rare mineral deposits.

Heller noted the industry is the second largest in Nevada after gambling, with about 11,000 residents who work directly in mining and another 52,000 who support the industry.

Although gold is the dominant mineral in northeastern Nevada, Heller said silver, copper, barite and other minerals also are produced in the state. Nevada is the nation's largest gold producer, with about 80 percent of the market, and fourth in the world behind South Africa, Australia and China.

China's demand for minerals is another factor to consider, Heller said, adding that the nation still imports 17 percent of its minerals from foreign sources and mining law changes "should not increase foreign sources."