Mineral explorers back bill to increase taxes on Nevada mining industry

Mineral explorers during a legislative committee meeting Tuesday took a swipe at controversial Nevada tax deductions mining companies use to reduce their taxable income by billions of dollars.

The explorers directly contradicted statements from the Nevada Mining Association, which represents major mining companies, that attempts by the Legislature to tweak the deductions could run afoul of the state constitution.

"The Nevada Constitution has been turned on its head when it comes to the taxation of mining," said Laura Granier, a lobbyist for the Nevada Mineral Resources Alliance, which represents mineral explorers. "The state should not be required to subsidize inefficient operations."

Granier was testifying in support of Senate Bill 492 by Sen. Sheila Leslie, D-Reno, which would shift the burden of newly imposed mining claims fees from exploration firms to production companies.

Claims fees imposed during the 2010 special session of the Legislature to fill about $25 million of an $800 million budget gap are misguided, the group said.

The fees, they said, imposed new expenses on activity that doesn’t generate much revenue until after claims are sold for development.

"Exploration is not mining," said Richard Bedell, president and CEO of Renaissance Gold Inc. "We don’t make any money until we hit a grand slam, which is rare."

The explorers blamed the Nevada Mining Association for negotiating the claims fees instead of changes in deductions that working mines use to reduce taxes, as proposed by then-Gov. Jim Gibbons.

The fee was applied to claim holdings on a sliding scale, with no fee on a claimant’s first 10, a $70 fee on claims 11 to 199, $85 on claims 200 to 1,299 and $195 on claims 1,300 and up.

The projected $25 million in new revenue was reduced to $18 million because of collection difficulties and the realization the fee was prompting people to drop claims.

SB492 would create a new fee system that would charge explorers $2.50 or $5.50 per claim depending on how many claims are held. It would maintain a $195 per claim fee on working mines, such as those owned by Newmont Mining, Barrick Gold and other members of the Nevada Mining Association.

The explorers suggested that if the Legislature wants to raise more money from the mining industry it should review the net proceeds deductions the mining association has fought hard to keep.

The suggestion piqued the interest of lawmakers, who are looking to raise money to offset cuts to education and other services in Gov. Brian Sandoval’s proposed $5.8 billion general fund budget.

"What I’m hearing you say is it is completely within the authority of the Legislature to determine the types of deductions which are and are not available," Senate Majority Leader Steven Horsford, D-Las Vegas, said.

"Absolutely," Granier replied, citing her take on the Nevada Constitution.

Nevada Mining Association President Tim Crowley testified as neutral on SB492, but after the hearing disputed Granier’s broader assertions about how the state constitution addresses mining taxation.

"We wholeheartedly disagree with that view," Crowley said. "One hundred and fifty years of Supreme Court rulings show that she is wrong."

Contact reporter Benjamin Spillman at bspillman@ reviewjournal.com or 702-477-3861.