A royalty on mined metals...

[GlennM]

We knew it wouldn't be long before they started looking at yet another way to burden mining. Now they're looking to amend the 1872 Mining Act directly by placing a royalty levy on mined minerals from Fed lands.

And wouldn't you know it... that business-hating (boycott AZ over SB1070) piece of work from Tucson would be behind it.

http://www.moneynews...12/12/id/467535

Revising a 19th-century U.S. law that governs the mining of gold and other precious metals could add billions of dollars to federal coffers at a time of tight budgets, according to some Democratic lawmakers and a government study released on Wednesday.

Taxpayers receive no royalties on metals pulled from federal land, and officials drew a blank when they tried to find out how much gold, silver, copper and other valuable metal is sold.

"Federal agencies generally do not collect data from hardrock mine operators," said the report from the nonpartisan Government Accountability Office, which looked at the market in 2010 and 2011.

But applying a metals levy of 12.5 percent - the benchmark government share for other resources - could deliver hundreds of millions of dollars a year to taxpayers, according to independent studies and U.S. Representative Raul Grijalva, who sought the report and other data from the mining industry.

"As we face these fiscal challenges, these are the pennies that we should pinch," said Grijalva, the leading Democrat on the panel that oversees public lands.

Grijalva, of Arizona, and Senator Tom Udall of New Mexico, who jointly called for the GAO report, say taxpayers should also benefit from a gold price surge that has boosted the bottom line for miners.

Applying Grijalva's royalty formula on the 1.1 million ounces of yellow metal pulled last year from Goldstrike mine in Nevada, the largest in North America, could have yielded $150 million to taxpayers, according to a Reuters tally of industry data.

Barrick Gold Corp, the mine operator, said only a fraction of Goldstrike is on federal land, and the company's taxes have already quadrupled in the five years of climbing gold prices.

Taxpayers are entitled to a royalty from metal sales nevertheless, lawmakers said.

Under Grijalva's proposed formula, Freeport-McMoRan Copper & Gold Inc's reserves of copper and molybdenum, which is used to toughen steel, would return about $700 million to taxpayers over the life of the mines, according to a Reuters tabulation of company data.

NO-ROYALTY RULE

The 1872 mining law that drove prospectors into western states such as California still governs much of the industry.

But this no-royalty law is a costly anachronism when mining giants can stake a claim on federal land for a few dollars an acre, Udall said. The coal, oil and gas industries, by comparison, have no such exemption.

"We are giving our gold and silver for free and don't even know how much we are giving," said Udall, whose father, Stewart, was secretary of the Interior during the 1960s and called mining law reform his great unfinished work.

Lawmakers who have occasionally tried to reform the mining rules have never cleared all the hurdles to pass new laws, as the industry has strong political allies.

Senate Majority Leader Harry Reid, a Democrat, counts on mining support in his home state of Nevada, and lawmakers say it will be difficult to persuade him to take a bite out of the industry.

But on Wednesday, the two top senators on the Energy and Natural Resources Committee said they were open to considering reform.

"There's been agreement for a long time that the 1872 Mining Law should be updated to include a royalty" and reduce paperwork, said Senator Lisa Murkowski, the panel's top Republican.

Ron Wyden, the incoming Democratic chairman of the committee, also believes the matter is due for review.

"This is one of a growing number of issues that Senator Wyden plans to look at in the next Congress," said spokesman Keith Chu.

Whether or not mining reform can become law, some lawmakers are ready to target the hundreds of millions of dollars in tax breaks the mining industry claims each year, which they see as an easier political gambit.

"There are a lot of write-offs, and this is an issue we can bring to the coming debate about tax reform," Grijalva said.

Those allowances also benefit the oil and gas industry, the GAO report says, with the federal take on energy exploration running billions of dollars below target.

The offshore oil fields that were supposed to deliver a 12.5 percent royalty to taxpayers brought about 8 percent in 2010 and 2011, according to the report.

One explanation for the shortfall, the report says, is industry allowances for the cost of transporting fuel and incentives meant to encourage some exploration.

"We need to always be looking back and seeing if there is a good reason to continue with exemptions," said Udall. "That's something we're not very good at in government - ending the exemptions when they're no longer needed."

State and local governments often catch a windfall from mining revenue, and Udall said Republican lawmakers from the West might be persuaded to increase the federal take.

"Everyone agrees we need a balanced package to find new revenue," he said, "and this seems like the right time for reform."

© 2012 Thomson/Reuters. All rights reserved.

Edited December 13, 2012 by GlennM

[homefire]

Just like all the other Tax on corperations, they will take there toys and go some place else.

[Rimshot]

IMO they should leave the little man out of this equation. I'll never get to hunt gold if this sheeet happens...well unless they let me right off my expenses. As hard as it is to find gold, how would they ever know if you did find some?

[GlennM]

Any sale over a certain amount these days requires a tax form to be completed. I think it's the I-FU2 form.

So, when making a sale of gold or other minerals, just break it up, I guess?

The big corps are the ones they're going after... but the legislation likely has no verbiage to exclude small scale.

[nvchris]

FWIW any gold found on FS land requires a permit to sell.

[Bedrock Bob]

The royalties on mined minerals make sense. Just like coal, oil and gas. I dont see the problem at all.

There is no reason for anyone to pay royalties unless they are going to make a profit from the minerals they recovered on land that belonged to everyone. If they are just hobbyists than they get to keep whatever they find. But if you want to be a professional miner and use public land to do it on I feel that you should have to pay something. So do most people. After all a mine takes land away from the public, uses it hard, has a huge profit potential, and the huge mining companies pay zero to the people. After all public land and minerals on it belong to the people and are being exploited by huge corporations for big profit.

Billions of dollars of money is generated for schools and roads from coal, oil and gas. This is money that the taxpayers do not have to get chopped out of their paycheck.

One of the biggest indistries in Arizona is copper. Why sould they not have to pay royalties for the use of the people's land just like any other enterprise on public land? How about uranium in New Mexico...Sooner or later it is going to boom again and when it does I want it to benefit everyone. Not just United Nuclear and then go bankrupt after causing a big nuclear mess in Rio Puerco!

Mining in general needs to pay their fair share when they do what they do on public land. Recreational prospectors should not have to pay anyhting and I would venture to guess not one single small miner will ever pay a cent for any gold he sells.

The Mining act is not about recreational prospecting nor is it specifically about gold mining. It is about mining in general and placer gold mining is only one tiny facet in a huge industry. And placer gold mining is so much unlike the rest of the mining industry as to be an entirely different animal all together.

It is easy to read something like this and envision a prospector as a "miner" being stepped on my the evil system. But it is not about placer mining at all. It is about copper and molybdenum mining. It is about rare earths and uranium. When you take into consideration the immense industry that is mining you can quickly see that taxing gold prospecting or gold mining is not the objective here.

If anyone here makes their living on land that is not yours you know you have to lease it. If you want to farm, grow apples, start a solar array, generate electricity or do anyhting else on public land you need to pay a little for the use of that land. Metals mining is the only industry that does not pay. And they have a history of making billions and leaving a mess behind.

I see how oil leases make it so much better here in New Mexico. We are now at a surplus in our budget and are sitting pretty with revenue. And I filled my tank for $2.84 cents today in Santa Fe! If the copper industry had to share in the wealth in Arizona like the gas indistry does in New Mexico your taxes would be half of what they are and your services would be better.

The government is the steward of the land for the people. The people want big mining to pay their fair share and they also want the rich to pay taxes. After all we bailed them out for bazillions and put our country in deep doo doo. Let them pay for the use of the people's land in proportion to their production. I see nothing wrong with that idea at all.

Edited December 14, 2012 by Bedrock Bob

[frank c]

Just wait an see, if it happens there will be another "cost" burden on the average Joe fer sure.

The extra expense will have to be "passed on to the public" just like all increases on everything.

AND IF YOU ARE GIFTED ENOUGH TO READ IN - BETWEEN THE LINES,.............................................

THIS will trickel down to everyone that uses BLM land also even the "lil guys" will be "regulated and taxed"

[sawmill]

Fellows

I have been following this ,from the very first time it was brought up.

The only go after big company thing,is a lie to ,put the small guys off guard.

There is a complete bill that this BS is attached to. It has every detail of what

they really intend included in that bill. They already have provisions for how they

intend to implement law regulating the sale of gold,and accountability .

The levy thing is just a cover,for totally wrecking the existing mining laws. The

people behind this,have every intent to gut the mining laws,and this is just a sneaky

way of getting their way.

[GlennM]

And Sawmill's estimation of the Bill is exactly what I suspect. The govt as a steward isn't something I buy anymore after seeing what they do to keep us out and herd us toward urban centers.

Mark my words that this, should it pass, is only a first step - a testing of the water, if you will - toward a more significant agenda to push industry out of the sticks and across the borders.

I don't disagree that large mining corps should also pay a royalty like in other industries. But I don't trust this govt to stop there. Give 'em and inch and they'll tax you for a mile.

[sawmill]

GlennM

The people behind this proposal have a long history of trying to do away with the 1872

mining laws period. They have tried to cram this mess through,under different titles

several times. The last time is was slipped in as a rider attached to another package. The

main bill was defeated,or they would have sneaked it through.

The information that you posted,is just a sales pitch and propaganda to fool the public.

The real details are buried in the fine print of the bill. Somewhere in the back posts on

this forum,there is a copy of the last bill. They even have it figured to use the IRS rules

for determining a business or hobby. If you find $600.00 or more in gold per year,you are

classified as a business under that bill,and subject to the same rules as the big guys.

From that point it just gets worse. The association claim fee issue was the actual test

They got away with that, and it gave them the green light to push the mining law refom

crap in the guise of a royalty. Grijalva,Rayhall,and the Udalls along with several others,

have all pushed this issue,and tried every underhanded trick to kill the mining law.

With the current revenue problems,and politicians,there is a good chance ,that this may

go through this time.

[Rimshot]

Well if this plays out like it is in this conversation I think it's going to hurt a lot of small businesses like Bill's and others. Not to mention the manufacturers of such equipment.

But then again if I say "Hey! sawmill! Come over. I want to sell you this nugget." Now do you really think i'm really going to say "Hey! We got to fill this paperwork out first." lllllllllll nooooooooooo! I only take cash...hahah! Then you can say you found the nugget.

[Bedrock Bob]

Recreational prospecting is to mining as deer hunting is to the slaughter of the buffalo.

The second amndment was not about duck hunting and the mining act was not about guaranteeing the rights of hobbyists. Nor is it about giving away our mineral wealth to huge corporations to exploit. It was there to promote individual exploration when this country was a wilderness. It desperately needs to be changed. It is being abused coming and going and the people are the ones that are taking it in the shorts and picking up the tab.

At some point a man must decide whether he wants to be a politician or a nugget shooter. Some fellows worry a lot about the law taking away something that it never really gave them. Others simply resign themselves to being an outlaw and do it anyway. I suppose it is up to each man to figure out what his calling is.

If recreationalists see themselves in a pinch becasue big mining is having to change its ways then they should seek their rights to enjoy their hobby under "muntiple use" and distance themselves from the REAL miners.

As far as worrying about being taxed when you sell a nugget I supose we can all tear our hair out over that one too. Either that or sell the gold anyway and keep all the money. Come on, if you are actually using public land for a commercial venture then it is all part of a business plan and that fee is not going to even be a factor in the success or failure of a REAL business. If it is recreation then it does not involve you and you dont need to worry about it. It is that simple.

[sawmill]

Rimshot

Suppose that I was an undercover agent. That little transaction could cost you $25,000.00

plus jail time. Yes they provided for cheating too.

Lets look at this 12.5 percent from a business stand point. The first thing is big mining companies

have lots of overhead expense. The mining they do requires processing lots of material for an ounce

of gold. The profit margin is not the same as picking up a few stray nuggets while detecting.

12.5 percent of the gross income is a heck of a loss. Plus the new proposed act,piles on a lot of

other hidden fees ,that they haven't mentioned in the propaganda. These companies have stock

holders too. Gold can sit at a certain price for long periods of time,but the operating costs can sky

rocket too. Sometimes a 12.5 percent royalty on the gross income could kill a mining company.

I have seen several mining companies shut down over just a small drop in mineral prices. Big

mining is a high risk business at best. Big mining is not the free loaders that they are portrayed to

be. Harry Reid even says that his state depends on the revenue generated by existing companies.

If you pulled all the mining companies out of Nevada now,the state would be in horrible shape. Not

only Nevada but several other states profit from those mines. All of the operating costs and taxes

is what generates the economy from a mine for the rest of us. When you hear the term free loading

from public land,you are listening to someone that is full of crap.

The gold produced in those mines continues to feed the economy after it is sold by the company

too. Who in their right mind could say that those mines are freeloading from the taxpayers?

[frank c]

Bob yer not mentioning the many CLUBS that hold claims which most all of us enjoy being a member and having use of the claims.

oh boy, whats goin to happen to their existence and what will be legislated and happen to / effect the operation of them ??

And the individual claimholders out there too.

These clubs and individuals have just had more costs infringed on them recently and some have lost or given up.

Who knows at this point right .

Theres ALWAYS more to it than meets the EYE.

[Bedrock Bob]

A club is not a mine. Club members are not miners. The mining act was not about recreation. Sorry. We cant give away the wealth and natural resources of this country to big corporations because someone wants to play miner in a club.

Should clubs and recreational prospectors be regulated under this law? No they should not. But since they refuse to view themselves as recreationalists and insist on claiming they are "miners" they must be regulated as such.

Mines go dormant becasue of profit margins. Not due to one cost factor or the other. Just like the oil companies stopped drilling in New Mexico becasue they claimed the Pit Rule was too costly. That was BS. They are drilling like mad now and complying with the rule and making money hand over fist. Royalties did not kill the oil business and they will not kill mining either. They will simply give the owners of the minerals something in return for the huge profits realized from mining them.

Am I sayiing that everything in this law is good? No. I am saying the giant mining companies that hold virtually ALL of the potentially productive public land in this country should schit or get off the pot and if they are going to mine that acreage they have been hoarding until the time is right then they should pay royalties to the public. They are using the public land and they should compensate the owners of that land. Just like they would have to on any other mineral rich land anywhere in the world.

No more free rides and corporate welfare for mining companies. Let them figure out how to make an honest profit while paying their fair share to the owners of the land and minerals just like oil, coal, gas, and every other extractive industry on the planet.

If they cant do it at a profit then it is not profitable. It is not up to the people to give away their wealth and natural resources to make ventures profitable for the fat cat.

Edited December 14, 2012 by Bedrock Bob

[frank c]

Sonny Boy yer missin my point.

My point is it ain't gonna end with just the big mining companys.

That will be the BEGINNING.

I'm done with this Have a nice day yaall.

Edited December 14, 2012 by frank c

[Bedrock Bob]

Sonny boy you seem to be unable to understand that this is NOT ABOUT RECREATIONAL PROSPECTING. It never was. The mining act simply does not involve recreational prospecting. Only mining.

And Sonny Boy, you aint a miner!

Edited December 14, 2012 by Bedrock Bob

[Rimshot]

If this trickles down to small claims holders, I think this idea of charging taxes on gold sold will end up backfiring into our governments faces. There will be sooo many vacated claims unc sam will be on the short end of this stick. I wonder if any of the politicians have actually ever tried prospecting for gold. I'm guessing 95% of people who do, lose their butt's trying after expenses are paid.

Heyyyyy Sonny Boys...........LMAO!!!

Edited December 14, 2012 by Rimshot

[rockhunter1620]

Just like all the other Tax on corperations, they will take there toys and go some place else.

And after that happens, the only source fer this new "royalty" to the guberment will be??????....wait for it?????....ME, the single one guy with a pick, shovel, and pan, who broke his back fer 50 hrs. in the heat or the creek, just to pull single ounce. (I got news fer ya sunshine, I ain't payin no royalty)

[homefire]

LOL! I bet ya won't have much problems selling gold without a 1099 too!

[Rimshot]

You never know the more I think about this....It might drive the price of gold up about 15%...

[explorer1]

Taxes, penalties and royalty levy. May be or sound the same but not necessarily.

Taxes are on goods sold.

Penalties are fines for when and what you screw up on.

Royalties are commissions, with a party (government in this case) as a silent partner.

If our government will claim royalties after you pay your initial permit fee to mine/prospect whatever. Then our government will also assume partial liability and any reclamation costs in years to come AFTER you do not renew your permit.

Here in Colorado we have acid drainage from mining years ago. Ground water pollution, deep holes, eroded holes in roadways. But people here are proactive. Enviromentalists, previous mine owners, our government, state, etc. Came together, and formed a stakeholders group. Where liability and reclamation costs is no longer an issue. They cleaned up that polluted land area in question to the best of a combined ability. So no more beuaratic (sp) bs.

But oddly enough according to one of those stakeholders they cleaned that area in question by diluting the acid drainage by sending it downstream. Imo our government should think twice before they put their hands out.

Edited December 15, 2012 by explorer1

[Hoser John]

finds??? what finds I ain' got no stinkn' finds John

[sawmill]

Explorer1

There is already reclamation provisions for any current mining operations,in the form

of bonds and deposits. This is already a part of all existing mining permits,and Plans.

The reclamation excuse for the royalty is an out right lie. The money will just go into the

federal general fund,to be squandered as usuall. We already have very strict laws and

provisions in place for reclamation of current mining operations.

The royalty thing is just an excuse,to break the back bone of the existing 1872 law. Once

they have done that,they will just continue to legislate us out of existence. This is not just

a royalty issue,they want a total reform of the existing laws,so they can regulate mining out

of existence period as we know it.

[El Dorado]

That's certainly the way I felt about the increase fees on placer claims.