Flannel shirt, pickax, maybe a battered tin for separating out the gold ore. That’s one historical and most likely imaginary picture of mining in Nevada.
Nope, not accurate.
Mining in the 21st century is a highly technical field that utilizes computer modeling, satellites and GPS locations. “A lot of mining operations have very large remote control of operations, so everything from the precise location of a blast hole to keeping up with exactly how long one of the large trucks has been sitting idling or how long it’s been moving, everything is monitored,” said Jeff Thompson, dean, University of Nevada, Reno, School of Sciences.
Welcome to 21st century mining. One of the core industries in our state, it’s also one of the industries in Nevada that’s in a growth phase. Mines are expanding, new mining companies are starting operations here, construction work is slated for mining operations and enrollment and graduation rates for those seeking mining careers at UNR are up.
The mining industry weathered the recession well, with rural Nevada mining counties remaining stronger and healthier than would have been the case without mining.
“It’s been absolutely critical, one of our primary industries, obviously a major contributor to our economy,” said Pam Borda, executive director, Elko County Economic Diversification Authority. “When everyone else in the nation was suffering pretty substantially, we were affected by the recession in terms of impacts from things that happened nationally, but essentially our county stayed healthy during that time, very much due to the mines.”
Despite the importance of mining to the state’s economy and the economy in rural counties, mining is not the second largest industry in Nevada, according to Tim Crowley, president, Nevada Mining Association.
“Culturally we’ve been known as the second industry in the state,” said Crowley. “If you go back far enough, we were the largest economic driver in the state in the 1860s, and into the 1900s, and culturally we’ve maintained being the second largest industry in the state when gaming surpassed us. But in reality, in terms of GDP, we’re about the ninth largest economic factor.”
Which isn’t to downplay mining’s importance to Nevada’s economy, but since the industry represents approximately 5 percent of the GDP, it’s unlikely mining alone will bring Nevada fully out of the recession.
Still, the growth is encouraging. There are projects in development in Lander, Eureka, Nye, Humboldt and Elko counties. There are plans to redevelop the Anaconda Mine, and Nevada Copper Corp. is developing around Yerington in Lyon County, the leading most depressed county in the state.
What Lies Beneath
Mining may not be the one-stop-shop for bringing Nevada’s economy back online, but it’s a significant player. Demand for many of the materials mined in Nevada is up, there are new mines opening and new mining companies moving in.
Just some of the minerals that lie under the Nevada sagebrush and rock are gold, silver, copper, lithium and vanadium.
“Diatomaceous earth is something I think Nevada should pay attention to,” said Crowley. “It’s a product used in a lot of household applications, everything from food filtration and my favorite, all domestic beer is filtered through diatomite filters.” It’s also used for pool filters, and kitty litter. The main company mining it is EP Minerals in Reno, which mines between Reno and Lovelock.
There are even some newcomers Nevada can take to market in the field of minerals. American Vanadium Corporation will be putting a new project into production in the next few years. Vanadium is similar to lithium and used in battery technology, green battery production and hybrid car batteries.
Nevada is the sixth largest gold producer in the world, behind five other countries.
Another mineral mined in Nevada is molybdenum, used in structural and stainless steels, in chemical applications during the crude oil refining process, in solar panels and tower steel for windmills – and in the multivitamin many of us take with breakfast.
General Moly is a Nevada mining company going through the permitting process to open their Mt. Hope project 23 miles northwest of Eureka. Once the permitting process is completed, and following about 20 months of construction on the mine project, the company projects it will be processing for the next 44 years.
“It’s a remarkable timeline and we will employ an average of 600 construction workers during the 20 month construction phase, and employ approximately 400 workers for the operations of the Mt. Hope mine,” said Zach Spencer, external communications manager, General Moly. With molybdenum selling for about $15 a pound, General Moly is expected to pay about $709 million in state and local taxes, and around $959 million in federal taxes for the course of the project. Following up on the heels of the Mt. Hope project is the Liberty project some 23 miles north of Tonopah, where General Moly intends to mine both moly and copper.
Newmont Mining isn’t new to the state – the company’s been here since 1965 – but now it’s expanding. Mining primarily gold, silver and copper, the company has been producing about 1.8 million ounces of gold a year and is looking to grow that over the next five years to 2.2 million ounces a year with the addition of one new project and the expansion of other existing projects.
Newmont is in Elko, Winnemucca, Battle Mountain, Carlin and the new project, Long Canyon, is between Wells and Wendover. Newmont will be submitting documents for permitting in March or April, then budgeting for the three-year permitting process.
“Permitting is one of our biggest challenges,” said John Mudge, vice president, environmental and social responsibility. “Especially with bigger projects that require a full EIS (environmental impact statement), it can take five or six years to permit. Permitting involves numerous studies and is quite a process to go through. The EPA gets involved and they have all their input and over the years there have been lawsuits from environmental groups and as a result of those, agencies try to make documents more and more thorough which makes them bigger and bigger and the studies get bigger and bigger and it takes more and more time.”
“In terms of BLM, they’re certainly very busy, there are a lot of projects going on and other mines opening and expanding,” said Duane Peck, mine general manager, Marigold Mining Company, a joint venture between Goldcorp and Barrick Gold. “But the agencies [for permitting] are good to work with and there’s been a renewed focus on improving the permitting process in terms of speed. We’re getting a lot of support from the Governor’s Office, they’ve opened up a dialog with BLM that’s been very helpful. This governor wants to create jobs and by getting the permit process moving timely, we’re able to do just that: create jobs.”
In addition to Barrick’s joint venture with Goldcorp, the company has teamed up with Kinross. The result is Round Mountain Gold, a large open pit gold mine in Central Nevada which has been in production since 1976.
By the Numbers
Nevada’s mining may happen in rural counties, but the effects of mining on the economy are felt statewide. In a state that ranked number one in unemployment in November 2011, coming in at 13 percent, mining’s employment numbers are impressive. In 2011, Allied Gold created 300 new jobs. Barrick Gold will put over 300 new jobs in place in 2012, General Moly will add another 300, Newmont will bring on 200 additional employees to add to the 3,800 in place and the 600 hired in 2011. Barrick Gold Corporation’s Bald Mountain mine in the Ruby Mountains just completed a major expansion – 400 people are there now, and following a $500 million expansion at Barrick’s Cortez, there are 1,200 workers there, and the list goes on.
“They’re putting more people to work at a time when unemployment is at its worst and not only putting them to work, but in jobs with family-sustaining wages,” said Crowley. “The average wage right now is over $80,000 with benefits.”
Those numbers don’t include the contractors brought onboard by mining companies. In addition to miners and mining engineers, there’s a demand for accountants, business and human resources people, experts to do remediation and watch environmental controls. In addition to Barrick’s 4,000 employees the company brings on thousands of suppliers and vendors. Barrick’s payroll is over $300 million annually, and since 2006 it has invested more than $2 billion in Nevada, according to Lou Schack, director of communications and community affairs. Marigold estimates that for the 12,000 people employed by that mine, there are another four to five people for each employed in support positions, meaning the mine has an overall impact on 60,000 people.
Kinross’ priority is its people, a point Lauren Roberts, regional vice president of the firm’s North America division recently reiterated. Speaking to the managers and front line supervisors at a daily planning meeting, he said, “North America delivered outstanding performance in 2011. Safety remains our primary focus and we need to continue to improve in this area. Everyone here and the folks that work for you are to be thanked for the success of this mine and Kinross, North America.”
Round Mountain Gold employs 800 employees and 200 plus contractors. The project’s employees have a Wellness Program as well as a nutritionest/personal trainer and pre-paid gym fees. Additionally, the company supports several local community organizations including the Tonopah Historical Mining Park.
In addition to mining’s impact on employment, there’s also its purchasing power. “We’re buying more equipment for the expansions we’re experiencing, but also taking the opportunity to replace older equipment and put in better efficiency measures and prepare for the future,” said Crowley. “There’s no saying this prosperity in the precious metals industry is going to last forever, so if you can invest in those things that can make you survive through the leaner times, you’ve got to do it now.”
Purchasing puts dollars in vendor’s pockets for everything from heavy equipment to the tires for that equipment, all of which piles up those sales and use tax dollars.
In 2010 the price of gold soared, increasing in value by 20 percent and mining’s tax contributions rose by 54 percent. The tax, called net proceeds minerals tax, is pegged at the value of gold. In 2011 Newmont paid $57 million in the mining-specific net proceeds tax, approximately $31 million in sales and use taxes to Nevada and another $3.5 million under the modified business tax (Nevada’s payroll tax).
It’s not just tax contributions, either; Newmont budgeted $90 million for exploration in 2011, which is increasing to $120 million in 2012.
But of course everyone knows mining is a boom or bust operation, so what happens to Nevada when the bust hits? Maybe nothing. Just like the image of mining has changed from the solitary individual with the shovel to a high tech company using satellites, today’s mining plays by new rules.
“Anymore mines have gotten very good about planning and constant exploration,” said Borda. A Newmont project has a 40 year projected life cycle and the mining companies are constantly adding to that. “They don’t really do boom and bust anymore, but people think they still do.”
Mining & Nevada Communities
Mining’s contributions to the communities where the industry is located is more than simply financial. In Elko, where Barrick Gold and Newmont have mines, Borda said the employees are great corporate citizens, involved in community service, active members of the Chamber of Commerce, and playing an active supporting role in the school district and college.
“We have programs in the communities we’re in where we entertain requests and give contributions to various nonprofit groups,” said Mudge. “In 2011 we gave about $1.2 million in contributions and through our giving program our employees gave $600,000 of their own money to charities in our communities.” That program is ramping up to $900,000 in 2012, with Newmont matching dollar for dollar the employee contributions.
Barrick Gold entered into a collaborative agreement with four Western Shoshone Tribes in 2008 to work on employment, economic development, and wellness and educational programs, and created the Western Shoshone Educational Legacy Fund, now close to $2 million, to pay college tuition for Shoshone students in the U.S.
The mining industry remains involved in education. “For us, one of the challenges is to make sure we stay current so our students have the proper background and education to go into this high tech industry,” said Thompson.
Those challenges are met with help from the industry itself. The University and the industry stay closely connected, with faculty and administration working with the mining industry where they’re welcomed into mines to understand the issues and technology students will be facing and using. “Sometimes we need them for support and they’re very generous in giving us help in the computer lab or a new piece of demonstration equipment so students are trained in areas of equipment and techniques they’ll be using when they graduate,” said Thompson. “It’s hard, and it’s an expensive education.”
The industry tries to help out with that expense, too. The mining companies fund initiatives and scholarships with Mackay School of Earth Sciences and Engineering (formerly Mackay School of Mines), with approximately $300,000 in scholarships given in 2011, most of it from individuals and companies directly related to mining. That’s important to Nevada’s future miners, because the school is one of only 13 remaining in the country.
We’ll continue to need trained mining engineers, because we’ll continue to expand mining.
“The future looks really good,” said Mudge. “The price of gold is good and driving growth in exploration for gold mines. General Moly has the molybdenum project going and there are lithium projects and the copper project in Yerington on the books. The price of metals generally are all up and it seems like demand globally is up probably because of the developing world, like China, continues to demand products as well as domestic use. Everything looks good for the future of mining here.”
