INTRO: Nevada is the third largest producer of gold in the world, churning out just under 8 million ounces of gold a year. With gold prices at 17-year highs, some gold mining companies are expanding. KNPR's Ky Plaskon reports on the possible economic impacts.
PLASKON: The Round Mountain Gold mine is 200 miles north of Las Vegas in the Big Smokey Valley. Mining is the only major industry in the valley. Mike Lannaccione is the General Manager. He says he's not only the unofficial mayor, but Nye County even looks to him for advice.
LANNACCIONE: I am asked to really look at everything affecting the community. Nye county water planning, I look at things that may affect roads and infrastructure. I am looking at how it will affect the economy and the school.
PLASKON: Gold operations like Lannaccione's have pushed production in the state to more than eight times what it was 20 years ago. Each day, Round Mountain produces - nearly one million dollars worth of gold. According to the company about 1-third of that goes to payroll and supplies. Lannaccione expected to close the mine in about 3 years, but since gold prices have climbed Round Mountain is adding mine life, to more than a decade.
LANNAVVIONE: This is an example of a project that is in exploration. After we have spent 12 million dollars and we have developed material, the permitting process could take 2-5 years.
PLASKON: Mining is expanding across the state. According to the Nevada Mining Association, after 5 years of declines mining claims were up 13 percent in 2003. Mining spent 40 million on expansion that year and 30 million on exploration. All this might sound good for state and local revenue, but while gold production by companies has multiplied 8 times over the past 20 years, tax revenue has only doubled according to the Nevada Mining Association's 2003 economic overview. Great Basin Mine Watch is completing a report on the economic impacts of hard rock mining in the state too. A draft shows that some company's pay no taxes at all says Mine Watch Executive Director Elyssa Rosen.
ROSEN: It is especially odd when you know in these recent years they have just been booming and yet they are paying zero taxes and so you look at the proportion of wealth coming out of these mines and what they are paying in taxes compared to say the gaming industry. They are really off the hook.
PLASKON: She says part of the reason is that an amendment to state's constitution caps the tax rate on minerals at 5 percent of proceeds. According to Mine Watch's report, in 2003 mining revenues were about 1-third as much as gaming. But mining only contributes 2.2 percent of Nevada's' Gross State Product according to the Department of Commerce. Construction, retail, lodging, and even recreation industries have surpassed mining as contributors to the states GDP. The Nevada Mining Association says mining as an industry is different though because it spends more on sales taxes with all the products it buys. For instance Lander County's taxable sales increased 391.4 percent over last year mainly due to mining. Great Basin Mine Watch expects to issue its official report on Mining's economic impact this year. The Nevada Mining Association will release its 2004 economic overview at the end of the month.
Ky Plaskon, News 88-9 KNPR
Barrick Gold in Round Mountain
Nevada Mining Association
See discussion rules