Report: Time for hard-rock mining companies to pay up

Royalties » Bill's sponsor says no free ride during economic crisis.

By Thomas Burr
The Salt Lake Tribune
Updated: 01/27/2009 06:56:06 PM MST

Washington » A 137-year-old exemption that allows companies to extract hard-rock minerals from public lands without paying royalties could cost the nation $1.6 billion during the next decade, says a new report by the Pew Campaign for Responsible Mining.

To reverse that exemption, House Natural Resources Committee Chairman Nick Rahall, D-W.Va., introduced legislation Tuesday that would treat the mineral-extraction companies the same as coal, oil and gas industries, which pay a percentage royalty for using public lands.

"Given our current economic crisis and the empty state of our national treasury, it is ludicrous to be allowing this outmoded law to continue to exempt these lucrative mining activities from paying a fair return to the American people," Rahall said in a statement.

The Mining Act of 1872, which hasn't been substantially updated since its passage, was written to encourage development in the West and affects 11 states, including Utah, according to Rahall's office. The law allows multinational conglomerates to stake mining claims on federal lands and extract minerals, such as uranium, gold, silver and copper without forking over royalties.

The Pew Campaign for Responsible Mining, which released a nine-page report Tuesday, said the "outdated policies" in the 19th century law subsidize the mining of metals on federal lands.
"In these difficult economic times, it goes without saying:

We can no longer afford to ignore a billion-dollar stream of untapped revenues," said Velma Smith, manager of the Pew push. "It's time for Congress to stop the mining industry's free ride and start treating it like any other business that uses public resources."

But the National Mining Association, a trade group for the industry, counters that Rahall's bill will penalize businesses and hurt the nation more than help it.

"If Congress wouldn't pass this bill when the economy was up and running last year, why would they pass it now that the economy is prostrate with a toe tag?" association spokesman Luke Popovich asked. "Our member companies have just this week announced layoffs and mine closures in the hard-rock West. Raising their costs of doing business is unlikely to stimulate new job creation."

Rahall's legislation is similar to a version that cleared the House in 2007 but never got out of committee in the Senate. The bill would require an 8 percent royalty on production from new hard-rock mines on public lands and a 4 percent royalty on existing mines.