One of the first industries in Nevada, mining, has a rich history in the Silver State. Today, the industry is a far cry from the days of pickaxes and is one of the most high-tech fields in the world. Even so, mining is often misunderstood in Nevada by those not in the industry. Recently, mining executives came together for a virtual roundtable, hosted by Nevada Business Magazine and sponsored by City National Bank, to discuss the issues facing their industry.
Connie Brennan, publisher and CEO of the magazine, served as moderator for the event. The magazine’s monthly roundtables bring together industry leaders to discuss relevant issues and solutions.
Do Nevadans Understand the Importance of Mining?
Matt Weaver: Mining is not appreciated and recognized as a required industry and it’s certainly viewed differently elsewhere in the world. It’s an educational issue. I’ve got a daughter who was just in an environmental class and her textbook had three pages on mining and summed it up that the industry creates acid rock, drainage issues, and nothing good comes of it. There’s no appreciation of where materials come from. It’s easy to say, if it’s not grown, then its mined. But [many think] it comes off Google and that’s where everything comes from.
Greg Walker: We’re not well understood, and we’re not valued, which is a problem. I was hoping what has happened in Nevada in the last three or four months will give us some focus. Having only one source of income is really an issue and mining allows the economy to have diversity. Nobody really understands the value that we add, not just from direct taxes, but the indirect value we add to the community. Mining is what drives this whole northern area around Elko and Winnemucca. We’re not well understood and we’re not well valued. We do need to get the message out to say mining is important, it gives us a diverse economy. It allows us to be a global player because supplying resources for the community, and the world globally, is important. We’ve got to become relevant. We have got to try to get the youth of the world to understand mining is a positive contributor and it’s actually a way for them to get a good career. Michael Pack: Southern Nevada, in particular, needs to better understand how important mining is to the entire state’s economy from a couple different perspectives. Almost all of our states’ tax structure is based on gaming, and then our next biggest contributor is mining. Without the mining, think about how bad out future would be in the state of Nevada. Most people do not realize that, primarily down in southern Nevada, but also in the Reno/Carson City area as well. Our business at Cashman is about 80 percent in mining, roughly. Certainly, without mining, Cashman would be a whole different company and the contributions that we make to the state and our local communities would be a whole different program.
Alan Driscoll: There is this perception that we, as an industry, are constantly trying to help the public to understand that mining is not what it used to be. The textbook that Matt was talking about is the perfect example of that. We’ve come a long way, and so we’re constantly fighting this battle to help the public understand that we’re good stewards of the environment, we are good partners in the community and it’s just takes a lot of effort. We’re not there yet, we’ve got a long way to go.
Corrado De Gasperis: There isn’t a sincere understanding or appreciation of what we’re doing. I think its deeper than just not understanding, I think there’s some folks that understand very well what we do and don’t accept it. It’s a little ironic, sometimes hypocritical, but it’s true, they don’t want it and it creates conflicts. We embraced a notion of being genuinely integrated into the community. I think the biggest challenge is demonstrating our social license, the innovation and environmental changes. We’re compliant and doing everything we’re supposed to do. Even if we’re [demonstrating] best practices, it’s necessary, but not sufficient. We need to do something differently and the word is innovation around environmental. I like things that are happening autonomously, with higher technology, we’re better, more efficient, effective and safer. We need innovation in environmental and we need to start showing some real differences in what the environment looks like when we’re done versus when we’re starting or in the middle.
Tyre Gray: We have an issue with the general public, which is that mining exists in Nevada and what mining looks like in Nevada. We also have, frankly, an issue with the business community. We are part of the business community. We don’t stand alone. We have all the same issues as a regular business, as the general business community, whether that be supply chain issues or workforce development. We have the same needs as general business. We need accountants, lawyers, HR professionals. What has happened, in the last couple of years, is that we’ve had a disconnect that has grown again, frankly, due to population growth. Our ability to place ourselves in front of the general public and the business community, to remind them that we’re here and we’re a part of the community, is an area that we’re challenged in and an area that I’m taking up as one of my key objectives.
How can the Image of Mining be Changed?
Walker: Part of it is the fact that we have these mine sites from 100 to 150 years ago left scattered around. You can see what’s there, there are piles of rocks, basically rubbish, around there; the image starts from there. Go to any website and look up a gold miner, and they’ll come up with a guy with a big beard and a pipe leaning on a shovel. It’s iconic but it’s not relevant. We’ve lost touch with the broader community. Talk to anyone under 30, they don’t resonate with that [image], they resonate with a computer, with the software we’re talking about and with automation. Just crying about the fact that nobody loves us is not very helpful. We need to make ourselves relevant with the younger generations so they can see that mining adds value to the globe and doesn’t destroy the environment as much as everybody says it does. They can actually get value out of it and that’s the piece we miss.
Michael Lefenfeld: The mining industry has led with sustainability practices. They haven’t been told what to do, they’ve actually exceeded the demand from the government. The younger community is not really getting the right look at mining, just look at what’s on television today. There are reality TV shows of old-style mining that’s not as environmentally friendly, not using automation or the techniques [of modern mines] to better continuous improvement and safety. None of those have been highlighted. The next generation miner is somebody doing AI (artificial intelligence), high tech programing and GPS satellite communications; those are the things that really need to be advertised.
Neil Jensen: It’s quite common to engage in conversation with people that aren’t familiar with mining and they definitely have a perception that it’s, either the industry that existed 100 years ago, or what you see on TV with some of these mining shows. The perception is intended on [mining] being a bit of a controversial type of place, maybe where safety is a risk, and things like that. The reality is, the huge diversity in careers and the professionalism and expertise that’s required in modern mining is competitive with many industries that are out there. A lot of our talents and skills are not unique to just mines in general. People actually transfer from other industries into mining and find it to be extremely rewarding. It is a very technical, innovative field. We are challenged, like any other business out there, to be very smart with our operating spend, to be able to mine more efficiently and in a tighter cost environment, so that we can continue to be sustainable and viable part of the economy. It’s imperative we employ continuous improvement programs, focus on efficiencies and bring about change in our business and how we do things. We have to have good partnerships with our suppliers and the manufacturing companies that support mining to be able to look for the next cost improvement or the next more productive piece of equipment that can help advance the overall industry. [Mining] is very cutting edge as opposed to the old pick and axe image of working in an underground mine. It’s interesting when people actually come out to the mines and go on tour. They are amazed at what their perception was before they came on tour and then once they actually go and meet people and see what’s going on in a working mine.
Weaver: We’ve got to somehow break that stereotype [of the pickaxe and shovel]. In small groups it seems we can convey a powerful message, but in the broader population it’s very difficult to break that in the US. In Australia, Chile, even Canada, where they are very much dependent upon mining there’s a very different perception, it’s completely the other way around. In the US, we’re always going to go to the store and buy it. We don’t worry about where it came from.
Driscoll: There is a larger issue, the culture of the United States, for the same reason that the steak has been disassociated from the cow. We go to the grocery store and everything is neatly wrapped in cellophane. We go to the hardware store and [there are] products made of metal or timber, but we have no concept of the source of these materials. That issue is going to be a little tougher to solve.
How much does Mining Contribute to Nevada, Fiscally?
Gray: One of the issues that that I’m working on here at the association is making sure it is very clear the taxes that the mining industry actually pays. A lot of times, we’ll see opponents of the mining industry only quote a single number, the net proceeds of mineral’s tax. To be clear, the mining industry pays every single tax that every other business pays, in addition to an industry specific tax. We have a tax that sits on top of the tax that everybody else pays. It’s like going to a restaurant, you divide the check, everybody pays their part of the check and then before the mining industry can get up and leave the table an additional check is presented. One of the big areas, a lot of people may be surprised to find out, the mining industry pays roughly 10 percent of all sales tax collected in Nevada. That’s an astronomical figure. A lot of our equipment are high dollars. If you’re buying a $5 million haul truck, that represents roughly $400,000 dollars in sales tax. The mining industry has the highest per employee tax burden. Currently, mining pays roughly about $15,000 in taxes, per employee, versus the average business that pays about $1,700. The MBT (Modified Business Tax) rate is usually about 1.4 percent, but for mining it is 2 percent. We pay at the highest rate. When people say that mining doesn’t pay its fair share, that’s really something that the industry grapples with when you look at the disparity. The mining industry and, generally, all businesses always opposed industry specific taxes. Tax revenue can fluctuate and it’s really hard to base your entire economy on one specific industry. We do have concerns about a tax that is solely geared at the mining industry, but we look forward to working with our business partners to have reasonable conversations about how we can create, or expand, on an existing tax structure that will be broad-based.
Jensen: Mining has continued to employ a significant portion of the workforce and pay a significant share of the taxes. We have got to make sure that, as we move forward, we continue to pay our equitable share of the tax base, but not be overly taxed in comparison to other industries in the state. It’s always that balance of paying the right amount of taxes and supporting the communities in the state, but being able to keep companies in business and keep mines going. Kinross did some work to understand a little bit more of the impact. There’s quite a big impact for Round Mountain alone. For 2018, Round Mountain was about $469 million of direct annual output of the $7.9 billion for the state; in 2019 it was $523 million, respectively. Round Mountain alone was about 6 percent of the mining sector in Nevada and 5 percent of the total mining jobs in the state. If you look at Nye County, we are the largest private employer in Nye County. We are the largest tax base for Nye County, the largest private employer. It’s a huge revenue stream, just for this one county. In 2018 we contributed just over 30 percent of the total tax intake for Nye County.
Does this Industry Struggle with Finding a Qualified Workfoce?
Jensen: There’s a lot of retirement out of some of the skill trades that we utilize heavily in mining and not as many people are coming into the mining industry as there used to be. It’s a potential problem that mining faces as a lot of our work is heavily reliant on those skilled trades to come into the workplace and be available for hire.
Lefenfeld: Cyanco just built a new plant in Nevada and we’ve struggled to get enough operators, maintenance and enough engineers.
Walker: That’s pretty much the same message that we would all have. We’ve constantly got positions vacant. Getting youth invigorated and excited about being in mining [is critical]. We support a STEM program and we have a $30 million-dollar commitment, over 10 years, to the Native American population to get youth interested into coming into mining.
Gray: The mining industry pays an average wage of about $90,000 so that is obviously a huge attractor to people. When we look at the workforce development, we are always looking for new, younger talent, who will take over in our positions. Our operators have identified that workforce development is key and critical. We’re working with Workforce Connections. They have people who want jobs and we have jobs; we’re starting to link skill sets. You have 10 percent turnover and, usually, we’re running at about 100 to 200 jobs always available. That’s a huge opportunity. When you add the high pay rate to it, that really should help to start to attract talent. We are developing strategic relationships in southern Nevada right now to work with the workforce development in order to create a pipeline program to the mining industry in some of our rural parts.
Jensen: There’s definingly always more work to be done. Jobs 4 Nevada graduates is a program that exists throughout the state. There wasn’t funding available to run a program here at Round Mountain, but we partnered with the school system to be able to bring that program here. All the graduates at the Round Mountain program knew what they were going to do after high school. The average GPA was 2.99 for the Round Mountain High School kids that were participating in that program. Programs like that are really important because not every one’s cut out to, necessarily, go to college or a trade school. We also partner with Great Basin College in Elko and have a MTC (maintenance training cooperative) scholarship program. We’re working to establish something similar with Truckee Meadows Community College in Reno. We’re always look to see what we can do to partner with some of the post high school educational programs and continue to develop workers.