Mining pays more

As an exploration geologist knowledgeable about the mining industry, I argue that your March 14 article, “A special case,” uses inappropriate analogies and misinformation. In summary, mining pays more tax than equivalent industries.

In metals exploration, you typically need 1,000 projects to obtain one success (discovery). Then, engineering, metallurgical and environmental studies costing tens of millions of dollars must determine if mining is economically and environmentally feasible. If this stage is passed, mine permitting and construction begins, at a cost of a hundred million dollars (at the low end) to several billions of dollars.

The minimum time from discovery to mining is 12 years, with a chance of failure at each stage. Compare this to the analogy used in the article of a sandwich shop where you buy your bread in the morning and sell it for profit a few hours later. The sandwich shop employs a few people at minimum wage while a mine can create hundreds of jobs that are the highest paid in the state. The sandwich shop is retail, and mining is wholesale. There are no other wholesalers in the state who pay additional taxes, but mining does. Therefore, mining pays more than its share. The 5 percent net proceeds tax that is special to mining is additional to equivalent industries. The government is trying to extract more money out of mining and to do so wishes to remove tax protections from the state constitution in order to manipulate it. This is both unnecessary and harmful.

First, Nevada has control of the deductions and just started to control these. Why remove this from the constitution if the government has not applied the tools it has? Second, mining requires a long and stable tax environment to put up high risk capital. Removing mining from the constitution and allowing government to manipulate the tax would create an immediate decrease in capital investment in Nevada. I can speak directly to the estimated $577 million invested in Nevada exploration in 2012.

Your article refers to Wyoming’s higher tax for oil, gas and coal. The risk in metals would be greatly diminished if we could drill one good hole and then pump it out like they do for petroleum. Coal beds are sedimentary units with large tonnages and continuity. Metals, and particularly gold, are far smaller deposits and less predictable.

At the end of the day, we want a strong tax base in Nevada. A yes vote on SJR 15 will provide fewer taxes, not just from direct investment but from the loss of high paying jobs.