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Vol. 12, No. 43 Week of October 28, 2007
Providing coverage of Alaska and Northwest Canada's mineral industry

MINING NEWS: The State of the State: Mining is Making It

J. P. Tangen

Guest Columnist

The author, J.P. Tangen has been practicing mining law in Alaska since 1975. He can be reached at jpt@jptangen.com or visit his Web site at www.jptangen.com. His opinions do not necessarily reflect those of the publishers of Mining News and Petroleum News.

The early indications are that this year’s Alaska Miners Association convention will be the best attended in recent memory. The present economic climate of consistent high demand for commodities and the associated rise in the price of product has permitted the industry, which was in the doldrums for many years, to find firm footing in Alaska.

Among many other positive factors is that we have a lot of land that is not owned by the federal government, so the machinations of obstructionist nongovernmental organizations, or NGOs, who have taken it upon themselves to bring the industry to its knees on federal public land have played into the hands of those wise folks who, many years ago, selected for the State and Native Corporations lands that are rich in natural resources. These lands can be developed, even as the mining on federal land takes a beating.

No more E&D on federal mining claims

For the uninitiated, U.S. Rep. Nick Rahall, D-West Virginia, is pushing legislation through Congress which, if enacted, as appears might be the case, will bring an end to exploration and development on federal mining claims.

Alaska, by contrast, has had a stable political climate for many years that fostered a safe and environmentally sound mining industry, which will provide good jobs for Alaskans for generations. Oil and gas may come and go, but mining is here to stay.

Alaska’s mining industry contributes to the state in many ways beyond jobs, however. It pays substantial taxes in the form of a mining license tax, corporate taxes and property taxes. It pays royalties to the State. It pays for all manner of community services and activities. And it brings unmatched opportunities to remote areas.

For example, the Red Dog mine contributes handsomely to the Northwest region, and Pogo provides immense opportunities for Alaskans living in the Delta area.

Should the Pebble project mature into a mine, it will literally breathe new life into Alaska’s great southwest.

One of the unique opportunities this year’s convention will offer is a joint presentation by the Alaska Departments of Revenue and Natural Resources regarding the Mining License Tax. Most owners and operators are acquainted with the obligation to apply for a mining license each year and the concomitant obligation to file tax returns; however, recent developments in the management of the MLT responsibility may justify a renewed focus on the preparation of these documents.

Deadlines must be honored and production details must be supplied (on a confidential basis, of course). Similarly, any outstanding confusion about the relationship of the MLT and the royalty due the State for operations conducted on state claims will be clarified. This presentation is sufficiently significant in the mind of the Alaska Miners Association that it is scheduled for three separate time-slots. Everyone can and should make a point of signing up to attend it.

Alaska good place to mine

Mining will never displace oil and gas with regard to revenue generation. Mining is a very different industry with hugely different economic factors in the mix. On the other hand, it can and does make a contribution proportionate to its ability. This year that contribution may exceed $150 million in taxes and royalties with every expectation of contributing more in the future.

Meanwhile, the fact that dozens of operations, large and small, are thriving bears witness to the fact that Alaska provides a positive and supportive environment that cannot be replicated elsewhere in the United States or the world. The success of this year’s mining convention is a testament to the combination of sound state policy and a healthy global economy.



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