The values of both precious and industrial metals and select minerals are up and rising. Previously closed mines are being reopened. Exploration for new untapped ore continues. Geothermal projects are increasing. Investment in the state’s mining is relatively strong. All of these activities indicate a stable industry in the Silver State.
“By and large, [Nevada] mining is healthy today,” said Tim Crowley, president of the Nevada Mining Association, a 300-member organization that represents the industry.
This economic sector is a bright spot in Nevada’s otherwise bleak economy that’s punctuated by a double-digit percent unemployment rate and an expected $3 billion budget shortfall over the next biennium.
Mining is supporting the state in ways other industries can’t right now. It’s providing and creating new, well-paying jobs, Crowley said. Mining also is generating goods and materials that help spur the economy. It’s paying “more taxes than ever before,” Crowley said, and several companies have even prepaid their 2010 taxes to boost state revenue. For example, Barrick Gold prepaid about $40 million in state taxes on estimated 2010 revenue from its Cortez mine operations.
“We’ve always taken our role in balancing the budget seriously,” Crowley said. “We’ll be at the table looking for solutions in 2011. We fully recognize the budget is going to be short, and we’re not going to shy away from working to fix that problem.”
Not All Good News
While precious metals are doing well, the demand for many other mining products is down.
In the past two years, some exploration firms stopped operating in the state. Other companies closed mines. Recently, Nevada dropped to No. 5 from No. 3 on the Fraser Institute’s annual ranking of the best places in the world to invest in mining, according to the group’s Survey of Mining Companies 2009/2010 data. Out of 72 jurisdictions worldwide, Nevada perennially has been in the top three spots over the past decade.
Companies mining minerals and metals closely tied to the construction industry, such as copper, gypsum and lime, are hurting, Crowley said. To stay afloat, these businesses are relying on diversity, focusing on other destination markets for their materials. For instance, lime, which is used in asphalt has another function as an acid neutralizer.
Resources mined in Nevada include gold, silver, copper, geothermal energy, aggregate, barite, cement, clays, diatomite, dimension stone, dolomite, gypsum, lime, limestone, lithium, magnesite, brucite, perlite, kalinite, salt, semiprecious gemstones (opal and turquoise), silica, zeolite and geothermal energy.
Due to the ongoing depressed economy, a number of mining companies has suffered. General Moly is one. This Elko-based company that explores, develops and mines molybdenum in Nevada, laid off 40 percent of its employees in March of last year and entered a cash conservation mode that it remains in today, said Zach Spencer, manager of external communications. “We had to slow things down, put a few things on hold,” he added.
Despite the difficulties, earlier this year General Moly secured about $765,000 in financing from the Chinese company, Hanlong Mining Investment, Inc. General Moly anticipates starting construction on Mt. Hope, its first Nevada molybdenum mine (22 miles northwest of Eureka), in about July 2011 once the permitting process is done and, subsequently, begin production in 2013.
Gold has shifted dramatically, ranging from about $812 per troy ounce in January 2009 to $1,215.21 per troy ounce in December 2009. The price of molybdenum moved between $33 and $7.50 a pound in 2009, then bumped up in 2010. It was $18 per pound in mid-May. The fluctuating prices of gold and other mined materials create an ongoing challenge for the industry. Not knowing what values will be years down the line makes planning, permitting (which typically takes between 5 and 7 years) and investing in expansions or new operations highly risky, said Louis Schack, director of communications and community affairs at Barrick Gold of North America.
“Obviously, if the gold market goes south, the struggles of the late 1990s and early 2000s could return,” he added. “I don’t think a lot of people realize the market risks—and potential rewards—that come with managing large mining operations.
“Ours is a very complex and challenging business that requires the focused efforts of thousands of dedicated employees to operate in a safe and socially responsible manner.”
Exploration of Nevada for additional deposits of minerals and metals is itself challenging for the companies involved in it, especially as ore becomes harder and harder to find. It requires lots of time, money and effort. Newmont Mining, for example, spends tens of millions of dollars a year on it, said John Mudge, vice-president of environmental and social responsibility for the North American region of the Denver-based company that primarily mines gold, but also silver and copper, in Nevada and seven other countries. Once additional ore is found, permits must be obtained and then infrastructure built before actually beginning to mine.
