A New Royalty RegimeU.S. Senator Harry Reid (D-Nevada), a political hack of the highest magnitude, previously had at least one redeeming characteristic: that of a stalwart defender of the mining industry. But, like all good demagogues, he apparently has a price, and has now seemed to abandon this industry during its crucial hour. In response to a Democratic proposal to impose an 8% royalty of gross mining revenue derived from Federal lands, Reid has stated that he now favors “real and reasonable reform.”
8 per cent! Good God, a royalty of that excessive amount makes such jurisdictions as Mongolia and the Democratic Republic of the Congo look positively warm and fuzzy! That 8% rate is tantamount to expropriation, as it is approximately the equivalent of seizing 25% to 40% of a projects ownership. If that Bill passes this year, then I think that president Bush, for all his detractions, would nevertheless still have enough good sense to veto it. But with the likely prospect of a Marxist such as Hillary Clinton soon to inhabit the White House, the glory days of mining in the United States may soon be extinct.
Mercator Minerals, however, has the unusual good fortune of being completely exempt from any such heavy-handed dealings. Thanks to a post by danatbank, citing a research report from Beacon Research, I have been reminded of a fact that I had previously been aware:
“…the lands on which the project operates is held in fee simple ownership, as opposed to public land…”
So there you have it, ML is one of the rare few companies that will escape the rigors of the new royalty regime completely unscathed.
Reproduced below is a recent news article in which this matter was discussed.
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Royalty-free Mining Days may be Near End
By Ken Dilanian, USA TODAY
https://www.usatoday.com/news/washington/2007-09-30-mining_N.htm
WASHINGTON — In 1872, President Ulysses S. Grant signed a law designed to let pick-and-shovel miners stake claims on the vast stretches of public lands that dominated the Western frontier.
These days, that law allows multinational mining companies to dig huge pits on federal property, extracting billions of dollars in gold, uranium and other minerals without paying royalties. Environmental and watchdog groups, including Earthworks and Taxpayers for Common Sense, say the law cheats the public, poisons the land and is now allowing hundreds of mining claims within miles of the Grand Canyon.
For decades, mining companies and Western lawmakers have beaten back attempts to update the mining law. But the combination of a new Congress, consolidation in the industry and a push by image-conscious retailers, including Tiffany & Co., has boosted the opportunity for change, said Jane Danowitz, who directs the Pew Campaign for Responsible Mining.
The House of Representatives may pass mining legislation as soon as the end of the year. The debate, all sides seem to agree, is now about the details: how much royalty should be paid, how it should be levied, the need for new environmental protections, and whether federal land managers will be allowed to block mining operations that could cause harm, something they now cannot do.
The big political question is what Western senators with ties to the mining industry, Democrats and Republicans alike, will be willing to support.
"Everyone's for reform now," said West Virginia Democrat Nick Rahall, who chairs the House Natural Resources Committee and is the main sponsor of a bill that has drawn broad support from critics of the 1872 law. The risk, he said, is "what I call sham reform."
Asked about the Senate, Rahall laughed: "Well, obviously, the man in control over there is the gentleman from the largest gold-producing state."
He was referring to Senate Majority Leader Harry Reid of Nevada, long an ardent defender of an industry that says it employs 14,000 Nevadans and mined $5.1 billion worth of minerals in the state last year.
"It is my genuine hope that at the end of this Congress that we can both be proud to have delivered real and reasonable reform for one of our nation's vital industries," Reid said at a July hearing held by Rahall in Elko, Nev., without being specific.
Tuesday, Rahall is scheduled to chair the third in a series of hearings on his bill, which includes an 8% royalty levy on gross mining revenue. Representatives of the mining industry, which is running advertisements against Rahall's proposal in Capitol Hill newspapers, told senators they favor a royalty on net mine profits.
Rahall said he worries that would allow companies to avoid paying a fair share. He noted that companies that extract coal, oil or timber from public land pay royalties on gross revenues. The United States would get $100 million a year if mineral miners had to pay similar royalties, according to Taxpayers for Common Sense.
Industry representatives also said they saw no need for new environmental restrictions. "Under current law, a mineral exploration or mining operation on federal lands is subject to a comprehensive framework of federal and state environmental laws and regulations," testified Tim Snider, president and chief operating officer of Freeport-McMoRan Copper & Gold.That's true, says former Interior Department general counsel Howard Leshy, "but there are loopholes, gaps that result in real problems."
Two weeks ago, an abandoned zinc and copper mine in southwestern Oregon, the Formosa Mine, was named a Superfund site. Highly acidic runoff is now contaminating a nearby creek, according to an Environmental Protection Agency statement.In 2004, an EPA inspector general report identified 156 hard-rock mining sites that have the potential to cost between $7 billion and $24 billion to clean up.
With the price of some minerals skyrocketing, the non-profit Environmental Working Group documented a surge in mining claims near national parks, including 815 within 5 miles of the Grand Canyon — 805 of them since 2003. Mining companies pay $30 up front and $125 per year to preserve a claim on a site of up to 160 acres.
Those sorts of findings are one reason some in the jewelry industry are supporting changes in the law, said Tiffany CEO Mike Kowalski.
"Tiffany customers, and indeed the vast majority of consumers, are concerned that the precious metals and gemstones that appear in our jewelry are mined responsibly," Kowalski said in an interview.
All sides are paying close attention to Reid, whose re-election fund has taken in a total of $270,250 from mining interests since 1989, according to the non-partisan Center for Responsive Politics. His separate Searchlight Leadership Fund has received $46,500 from hard-rock mining executives and political committees since 2005, the center says.
Reid's late father was a gold miner. Reid's son-in-law, Steven Barringer, is registered as a lobbyist for Newmont Mining Co., one of the world's largest gold mining companies, and Coeur d' Alene Mines Corp., a silver miner. Reid maintains a policy that prohibits his family members from lobbying him or his staff, said spokesman Jon Summers, who added that contributions play no role in the senator's deliberations. Barringer wrote in an e-mail: "I am an environmental and mining lawyer with over twenty years of experience, and trust that this expertise is the reason I have Newmont and others as clients, not because of my relationship tp Senator Reid."