Nevada could see more mine layoffs

Despite record gold production in 1997, Nevada's mining industry faces more job losses.

It's a best of times and worst of times scenario.

Gold production, the state's claim to mining fame, is at an all time high in the Silver State. Some 7.853 million ounces of gold were produced in 1997, placing Nevada as the third-largest gold producer behind Australia and South Africa.

That bad news is miners are getting less money for that gold.

"It was a great year in that we broke records for producing gold," said Russ Fields, president of the Nevada Mining Association. "But it was a bad year because we didn't make much money."

Fields spoke Tuesday to the Las Vegas Sun Editorial Board.

The industry's revenue decline is due to depressed prices worldwide, prices that industry officials say are not likely to recover anytime soon. The Asian financial crisis and the possibility of European countries selling bullion holdings to meet European Monetary Union standards are cited as reasons for the price decline.

Gold prices dipped almost 15 percent from 1996 to 1997, from $387 per ounce to $331 per ounce. Gold fell to an 18-year low in January at $278 per ounce.

Nevada miners reaped about $2.58 billion in 1997, compared to $2.7 billion in 1996 when they produced 7 million ounces of gold.

That's leaving mining companies scurrying to cut costs in order to retain profits. And cost-cutting often translates into job reductions. Fields said about 600 of the state's roughly 14,000 mining jobs have been lost.

Most mining in Nevada generally takes place in the rural northern parts of the state where any job losses have a huge impact.

"One of the highest cost components is the human resources factor," Fields said. "But it's (job reductions) a last resort they turn to. In a rural town it has a big effect."

The Las Vegas economy is largely insulated from minings ups and downs.

In Clark County there are five major mines, not counting rock and gravel operations, that produce limestone, gypsum, dolomite and silica sand and employ more than 300.

The biggest issue in the Las Vegas Valley with mining is the gravel trucks traversing near residential areas that raise the ire of citizens by kicking up dust. Fields said no sand and gravel processors belong to his association, but that in other parts of the state, like Eureka, disputes between residents and companies have been resolved by getting the two sides together.

"Mining has to be a good neighbor to the community it's next to," Fields said.

The mining industry says it also wants to be a good neighbor by agreeing to reforms in the 1872 federal mining law. That law lets companies obtain federal land, and the minerals under it, for $2.50 to $5 per acre. And they pay no royalties.

Fields said Congress will eventually change the law. The industry is backing a measure that would call for miners to pay fair market value for the land, plus royalties on net profits. Interior Secretary Bruce Babbitt has called for companies to pay royalties based on gross profits.

That conflict bogged down efforts at reform in Congress earlier this year. Fields said the issue is not likely to re-surface until Congress reconvenes next year.

Fields said the profit margin for mining is so slim that paying royalties on gross profits would endanger companies.

"If we faced a gross profit royalty, that would be very burdensome," Fields said.

Yet the negative news isn't blunting the industry's optimism. Industry officials say the price of gold will rebound, eventually, and they want to present the industry as a modern, environmentally responsible economic engine.

Russ said he wants to distinguish the modern industry from the stereotypical mule and pick image many have of mining.

Fields noted today's operations are more high-tech, especially in underground mines where safety concerns are more extensive than in surface mining. For example, some underground mines use robotics to extract minerals, leaving human workers a safe distance away.

Great Basin College is offering underground mine training to fill the demand for experienced underground miners, Fields said.

"It's a different industry than it was even 15 years ago," Fields said.

Plus, he said Nevada mining accounted for more than $125 million in state taxes last year.

archive