ECONOMIC IMPACTS OF MINING IN NEVADA--1997
Mining in Nevada in 1997 increased over the prior year in terms of production
amounts, but due primarily to lower gold and silver prices the value of
production was less than 1996. From the discovery of the Comstock silver
deposits in 1859 to today, mining has had a major role in the state's
economy. The Nevada mineral industry in 1997, as it has for several years,
led the nation in the production of gold, silver, and barite; was second
in diatomite and lithium; and was the only producer of mined magnesite.
Total mineral production in Nevada in 1997 had an estimated value of about
$3.3 billion, down from a record level of $3.4 billion in 1996.
reached 7,853,000 troy ounces in 1997, a new state record, and a 12%
increase over the record high production established in 1996. Nevada
is the third largest producer of gold in the world, behind only South
Africa and Australia.
exceeded 20 million ounces for the fifth year in a row and set a new
record at 24,748,000 troy ounces.
was 148,600,000 pounds, 50% more than in 1996. Lime production increased
nearly 50% over 1996, largely due to increased demand by gold operations for
pH control. Gypsum production also increased due to the construction industry's
demand for more wallboard.
The trend of growing production of gold from underground operations became
firmly established in 1996 and continued in 1997. Twenty percent (1.57 million
ounces) of Nevada's gold production was mined underground. Barrick Goldstrike's
Meikle Mine in Elko County is the largest underground gold mine in the United
States with 1997 production of 574,308 ounces. New underground mines expected
to begin production in 1998 include Getchell Gold's Turquoise Ridge Mine and
Midas Joint Venture's Ken Snyder Mine. While open-pit mines will continue to
produce most of Nevada's gold, underground mines will become increasingly important.
According to the Nevada Department of Employment, Training and
Rehabilitation, for the last four quarters available (last quarter of
1996 and first three quarters of 1997), Nevada mining operations employed
14,758 workers. The total payroll for that period was $734,096,985 making
the average annual pay for a mine worker $49,742, the highest average for
any sector in the state. The average salary for all Nevada workers in 1997
was $26,791. In addition to the direct employment in mining, there are an
estimated 48,000 additional indirect jobs in the state related to providing
goods and services needed by the industry.
Taxes and Other Impacts
The taxes paid by the mining industry to state and local government is derived
from property taxes, sales and use tax and, unique to the minerals industry,
net proceeds of mines tax. The net proceeds of mines tax for 1997 totaled
approximately $30.2 million, with $16.2 million paid to the state and $14.0
million paid to the counties. Revenues generated from property and sales taxes
for 1997 are not yet totaled as of this report, but they should be approximately
equal to those paid in 1996.
The economic impact of mining is important for the state as a whole, but
the greatest impacts are felt by local communities near the mines. These
towns, like Elko, Lovelock, Battle Mountain, Winnemucca, Beatty, Eureka,
and Ely enjoy healthy economies because of the high paying employment and
the taxes and contributions of the industry.
In addition to the positive economic impacts, growth related to mine
development often effects nearby communities in ways that are difficult
for local governments to deal with. Demands on schools, police, fire
protection and other public services increase when large mines open or
undergo expansions. Many mining companies help offset this increase by
providing donations of money, water systems, school buildings, buses and
other services to the communities where their mines are located.
Permitting and Reclamation
Before mining can take place, plans must be submitted and permits must
be obtained from federal and state agencies to ensure protection of water,
air, wildlife, land, and other resources. Nevada and federal laws and
regulations require that lands disturbed by mining must be rehabilitated
so they can be used for other purposes once mining is complete. The goal
of this process, called reclamation, is to return mined areas to a condition
capable of supporting resources and activities such as wildlife habitat,
livestock grazing, recreation and new industrial uses. To insure reclamation
is done, bonds are posted by operators and held by the government agencies.
Bonds are released only after the area is stabilized and reclamation criteria
are met. The various uses of the land after mining and reclamation are
done also have a beneficial economic impact on nearby communities and
on the state.
Nevada's reported gold reserves at or near currently operating mines which
can be mined at a profit with reasonably foreseeable economics stood at about
103 million ounces at the end of 1997. Many Nevada mining operations have
been able to add to reserves each year with development drilling, thereby
extending their lives. It is also true that mining companies do not completely
drill out their ore deposits if reserves are sufficient for their current
planning horizon. Extensive additional gold resources are present at properties
that are currently in various stages of development and permitting. The
price of gold, however, is an important factor in determining whether a
reserve is really a reserve or just a sub-economic resource. With the
gold price currently at a relative low, many companies have had to
reevaluate their reserves, and reclassify some as sub-economic resources.
If the price of gold rebounds, these subeconomic resources will regain
their reserve status. At current gold prices, the existing proven reserves
are enough to sustain gold production at current levels for about 15 years.
Exploration for new deposits, particularly gold, is an ongoing effort
by the producing companies and many others who do not operate mines in
the state. About 310 geologists in Nevada are employed primarily to
explore for mineral properties that can be developed into new mines.
These geologists, together with their support staff and expenditures
on drilling, assaying, travel, and other related costs, represent a
significant additional positive economic impact, particularly in the
rural communities. In 1997, exploration spending in Nevada totaled
about $131 million.
Minerals Other Than Gold and Silver
Minerals besides gold and silver are also important to Nevada's
economy. Industrial minerals such as barite, copper, diatomite,
gypsum, limestone, lithium carbonate, magnesite, and specialty
clays in the state. Sand, gravel, and crushed stone are critical
to the building requirements of the state's cities and towns and
to the infrastructure of roads and airports.
and gas exploration and production in Nevada is a small industry
when compared with mining, but it does contribute to the economy of
east-central Nevada. In oil field terms, Nevada is a "frontier," meaning
its potential is really yet to be realized. Oil production in 1997 was about
1.0 million barrels (42 gallons per barrel) with an average value estimated at
$15.00 per barrel, or $15 million. Nevada oil is used for the production of
kerosene, diesel, boiler fuel and asphalt. In 1997, 14 new wells were drilled
for oil and four of these became producing wells. These wells, many of which are
risky exploration wells called wildcats, indicate the oil industry's enthusiasm
for Nevada's potential. No natural gas is commercially produced in the state,
but minor gas produced at the Kate Spring Field in Railroad Valley is used
to fuel onsite equipment.
Nevada is rich in geothermal resources. There are currently 14 plants at 10
locations in the state with a total electric generating rated capacity of
236.8 megawatts (MW). Net geothermal electrical production sold in Nevada
in 1997 was 1,347,655 MW hours with a net value estimated at $107 million.
Electric generating capacity and output have been fairly steady for the past
several years. Geothermal heat is also used in a variety of commercial,
domestic, and public applications in Nevada. Mining, aquaculture, and
agriculture also benefit from geothermal resources. Schools in Elko County,
and homes and commercial buildings in Lincoln and Washoe Counties are
examples of public and private facilities in Nevada using this renewable
Nevada's mineral industry continued to be a major economic force in the
state during 1997. This situation should continue for many years to come.
The conditions that lead to this optimism are that most Nevada mines have
significant known reserves with good potential to add to those reserves.
Gold exploration efforts have been successful and several new large mining
projects are scheduled to be developed within the next several years. Oil
and gas exploration has increased, as the state has caught the eye of oil
company explorationists. Finally, geothermal energy production has remained