Recently, executives from the mining and support industries gathered at the Reno offices of Holland and Hart, LLP. The mining industry in Nevada is being scrutinized by the Legislature as the state looks to increase its tax revenue. The group discussed how these challenges affect the industry and its supplier industries and what the future of mining in Nevada will look like. Connie Brennan, publisher of Nevada Business, served as moderator for this monthly event that brings leaders together to discuss issues pertinent to their professions. Following is a condensed version of the roundtable discussion.

Nevada Legislature

Currently, the Nevada Legislature is considering ways to overcome a massive budget shortfall. There has been talk of increasing taxes on the mining industry as a source of state revenue. Currently, the price of gold is extremely high, $952.65/ounce at press time.

Tim Crowley: We’ve always been concerned about the economic viability of the state and making sure that residents have the services the state provides. We want to play our part in making sure that the budget is funded at an adequate level. The one thing that needs to happen at this point is that all businesses participate at the same level to provide those services, because they’re all citizens here too. I think that we’ve been singled out before. We pay a disproportionate share of the taxes, and it’s not an issue of we don’t want to be picked on; it’s an issue of fairness.

Gene Etcheverry: Without prosperous growth, the Nevada tax structure doesn’t work. So naturally they’re looking at the gold belt, not understanding that $900 gold, doesn’t necessarily mean that the profitability went up as it did with some other companies. They just don’t get it, after all these years.

John Mudge: For mining to be sustained in this state, we have to invest our profits back into the ground, into the next mine. It’s very capital intensive. For us to do the Phoenix Mine in Laudner County is a couple hundred million dollars. That had to come out of the profit. If the profits are taxed the way they propose, we’re not developing the next mine and eventually we’re  out of business here.

Environmental Protection Efforts

The group discussed environmental protection mechanisms and reclamation efforts and how these activities have evolved.

Mudge: Reclamation is expensive. It’s a continual process of mining and reclaiming as you go, and my company has got bonding in excess of $500 million to guarantee that the reclamation work does get done out there, and we spend millions every year in ongoing reclamation.

Crowley: It’s not a static issue; it is very dynamic. We are working with regulators constantly as we learn more about the environment, learn more about the impacts of mining, and that dialogue is literally ongoing. Every week there are discussions between the mines and the regulators to deal with what we do better.

Roger Jeppson: In the early ‘70s there was a thing called the Mining Law Review Commission. Congress wanted to revise mining laws and do away with some of the anachronisms. The mining industry would have none of it. They said, “We want everything to be the way it is,” and so they were able to kill the bill, which may have been one of the dumbest things that the industry ever did. That led to creeping regulations that started right after the failure of the Mining Law Review Commission.

Matt Setty: I would hope that we’re getting to a point where the environmental liability burden on the mining companies is on a downward trend, as technology and the lessons learned have increased. Our seed mixes, our methodologies for reclamation, our prevention of acid mine drainage today is much more advanced than it was 20 years ago. So adding those up, you would think that, going forward, we ought to be able to have appropriate environmental stewardship, at a lower burden to the mining companies than what we initially started out with.

Anne Rosevear: The mining industry, whether it was motivated by regulatory measures or a shift in philosophy, more receptive and they are moving towards stewardship. Additionally, the public needs to understand that mining is not going away, it’s going to be done better.

Zach Spencer: I did an interview with a reporter a few years ago, and before we started the interview, the reporter said, “Well, I have to warn you, I’m an environmentalist.” And I said, “Well, that’s fine because everybody that works here is an environmentalist, too.” Not only do we work here, but we live here and we want to protect the environment because that’s where we recreate when we’re not at work.

Jim Taranik: Shareholders are becoming very proactive with respect to mining sustainability and as a result, boards of directors have created environmental committees. These committees, such as Newmont’s Social Responsibility Committee, are charged with performing studies on mining and its impacts on social and environmental issues within the communities the company operates in.

Employment Challenges

With the retirement of the baby boomers imminent, the panel discussed the current and future outlook for employment challenges in the mining industry.

Mudge: Up until our economy went crazy, Newmont always had about 150 openings. With the economy changing, it’s probably helped us because miners from other areas of the country have left metals that aren’t doing as well and come to Newmont.

Taranik: There’s a huge gap of talent and expertise. It’s about a 15-year gap, and it really exists from 38 to about 50 years. What this means for a graduate entering the work force is that, first of all, they’re going to be highly competitive upon employment, and then they will have the opportunity to move up very rapidly within the corporation. Unfortunately, there are not enough kids taking advantage of this opportunity. It’s one of the things that we really have to actively recruit for.

Public Relations Challenges

The executives discussed the fact that most people outside of the mining industry are ignorant to the role the industry plays in Nevada. This lack of knowledge presents a unique challenge for advocates of the industry.

Spencer: It’s our responsibility to educate the public about what we do we do it and why we do it. The communities where we operate see the benefits of having the mining industry in their community, but we need to extend that. The Nevada Mining Association is comprised of some excellent companies and each company does their part to educate the public, but we have to continue doing that.

Taranik: Enlightening people is key, particularly about the role of mining in other industries. We have to explain to people that if you want to do renewable energy, such as building solar panels, you need certain kinds of materials that are going to go into those solar panels, everything from copper wire to silicon that goes on the solar panels. You need very exotic kinds of minerals that are crucial in making those little photodiodes work. You quickly find out that there’s a huge amount of materials that are required to move to a atmospherically friendly climate.

Mudge: The effects of mining, whether it is 50 years or a hundred years ago, are still visible out there and those effects are judged by today’s standards. Mining at the turn of the century was not concerned with environmental protection as it was not a high priority at that time. I always say it’s not fair to judge the miners of the past by today’s standards.

Setty: There’s also a division between the sizes of a company. Compared to the small and medium size companies, the big companies are going to get the bad rep because they have a lot more public presence. Additionally, I’ve worked on mining sites abroad and the perception of U.S. mining is much better than what it is locally.

Wadhams: Most people who don’t live in close proximity to mining don’t know that mining exists and their picture is the turn-of-the-last-century mining. They don’t understand modern reclamation, they don’t understand the education level, the commitment to the work force, and that’s one of the biggest challenges we have. Seventy percent of the company’s people live in Clark County and overlook the fact that one of the greatest reclamation projects is right under their nose. It is called Spanish Trails, which was a huge aggregate mine and now it has become a high-end golf course location. That’s where I think modern mining has failed. It’s not that they’re doing a bad job; it’s that they’re not taking care of making sure that the public, really understands. It’s an educational effort and is almost impossible to achieve, but it’s something that we need to continue to work on.

Jeppson: Nevada is one of the enlightened places regarding mining, but you have to come to grips with the fact that, right or wrong, the majority of people in the U.S. either don’t know anything about the mining industry and hate it, or just hate it in general terms. It’s a real problem and it’s a problem you’re going to see in the Nevada Legislature among other places. I’ve been in several lawsuits involving major players and we have been beaten on several occasions by a better PR firm after winning every courtroom battle you could imagine. There’s a lesson there. It worries me that we sit here and say we can do these things, because I have been beaten when I knew we were right, but we lost the battle of public opinion, and that’s probably the worst battle you can lose because you’re dead in the water.

Technology & Evolution

The mining industry has made huge strides in implementing the most up-to-date technologies into their operations. By doing so, the face of mining is very different than in years past. The executives discussed the evolution of the mining industry as it relates to its sustainability.

Crowley: One of the main changes that you’ve seen over the last ten years is the advancement of underground mining. The reason why that’s significant is because it allows the mining industry to maintain a pretty constant level of profit during the highs and lows, the ups and downs of the gold value, or any metal. At the same time, the impact on the environment is far less. We’re now more able to target the ore bodies that are best for the economy at the time. We used to be the classic boom-bust industry, and through trial and error and advanced technologies, we’re a sustainable company. We’re here for the long haul, we’re going to manage the resources that we have over many decades to come, and I think technology has provided that.

Mudge: Our guys are now using remote-operated equipment. The underground miner has got the joy sticks that hang from his shoulders, and a large piece of diesel equipment that’s actually doing the excavating. He’s operating this in the safer area while the equipment is in the more dangerous zone.

Setty: With remote sensing and exploration now, we can look at more amounts of land for mineral resources with a lower environmental footprint than we could have ten years ago. We can mine at depths and in underground formations that we couldn’t do 20 to 50 years ago. Very different stuff is coming out with deeper drilling technology, such as safer environments to work in for underground, robotics, backfilling stops and other techniques underground. Technology is allowing for the continuance of getting gold of various grades or accessing gold that we couldn’t 20 years ago.