Canada to secede from Nevada

Mining corporations are threatening to leave Nevada if Congress approves a royalty payment on mining done on public lands.

If on hearing this threat to Nevada’s economic well being you are tempted to take an aspirin and lie down, you might want to hold off. There is less to this threat than meets the eye.

Mining companies have a long history of holding their breath to try to get their way. In 1914, mining company owner George Wingfield threatened to take his investments out of Nevada if women’s suffrage was approved by state voters. A Nevada newspaper responded:

We’re sorry to lose you, George.

But where’re you going to go

With all the women voting

From Maine to Idaho?

Suffrage passed by a landslide, and Wingfield unfortunately stayed put to blight Nevada for the rest of his disreputable life.

A decade or so ago when corporations were threatening to pull their investments out of Nevada mining because of environmental regulations, our crosstown colleague Cory Farley (see page 10) responded with one of his to-the-point observations: “How do you move a mine?”

Right now, federal law on mining royalties is, as former Sen. Dale Bumpers put it, a license to steal—no royalties at all after the initial and inadequate fee. The proposed royalty that now has the mining corporations in a lather in Congress is a disgrace—a mere 4 percent, down from the paltry 7 percent originally proposed.

U.S. Sen. Harry Reid of Nevada is complaining about making existing companies pay any royalty at all, saying the 4 percent should only be imposed against new entries into the mining field. There is no particular reason for such a distinction—indeed, the existing companies should probably be the first one’s hit, because they’ve built themselves up on a royalty-free existence all along. If any companies need a break, which is doubtful, it’s the new entries.

The truth is that mining will go on in Nevada as it has in the past—operating when the market demands it, slowing when demand is down. And mining will shut down in Nevada later than most places because the state’s founders foolishly wrote a tax loophole for mining into the state constitution, and it’s still there. (Nevada’s tax system is such a sweet deal for mining that a think tank recently recommended against using it as a model for the planned federal royalty.)

The mining industry has a local slogan: “Mining—it works for Nevada.” As former Gov. Bob Miller noted, “It’s not working hard enough.”

But imagine that everything the mining conglomerates say comes true and they end up leaving Nevada.

Some jobs would be lost, but some despoilation of the environment will be avoided.

Some counties will lose economic activity, but the corporations—most of which are foreign, principally Canadian—will stop shipping the capital harvested from Nevada’s hills out of the country.

We can live with it.