Q: On that note, what is your reaction to the potential constitutional changes to mining taxes approved during the special legislative session this summer?

Gray: Mining has always been at the table for Nevada. Mining is part of Nevada — mining was here when Nevada was founded, period. We used to be Nevada’s No. 1 industry, but Nevada has diversified, and that’s a great thing, so we’ve gone from No. 1 to No. 12. When you look at some of the consequences coming out of the tax conversations, it’s important to make sure you break them down a little bit.

AJR1 and SJR1, those two have a lot in common, so I’ll talk about those together. It would transmute the tax from a tax on net proceeds to a tax on the gross. And businesses generally are not taxed on the gross. And that becomes really difficult for any business because now you’re taking profit off the front line. And profit margins are relatively small in our business, particularly because we sell in commodity and we don’t have the ability to set the price; the price is set somewhere else. So, whether it costs you $1,500 to get an ounce of gold or $1,200 or whatever your fixed cost is, that’s what it costs. So, you’re adding on top of that cost, and if the price of gold or the price of silver or the price of lithium falls beneath that, then you’re in a weird position because you’re still paying a tax and not actually generating revenue. That would be something kind of unheard of. We’d be the only state with that level of taxation on the mining industry like that.

AJR1 and SJR1 would represent roughly a 385% tax increase. We can all agree that that’s a number that’s shocking to the conscience. AJR2 would represent a 140% increase, and we would probably say that that was unconscionable, too, but when compared to the two, you go, “OK, 385% versus 140%? I think I’ll look at the 140.” 

AJR2 is one that the industry is neutral on. AJR1 and SJR1, the industry is 100% opposed to. Our neutrality on AJR2 is really based upon the ability to create a statutory fix. What that would do is it raises the cap. That would give the legislature the ability to adjust the cap upwards to 12%. So it’d take the cap from 5% to possibly up to 12%. Frankly, the legislature could keep it where it is today, and if there were a need later on, maybe inch it up a percentage point or half a percentage point or whatever the case is. It just provides mobility. In order to get from a position of neutral to support on that we would have to see what some trailer bills look like, and what proposals are on the table for that. And we’re engaged in conversations and we welcome those conversations. We’re happy to be part of the solution but we can’t be the solution. Again, we’re the 12th largest industry, so it would be hard to balance the entire state’s budget on just one industry.

The industry is not opposed to tax increases, but what it is opposed to is a tax increase that would, frankly, hurt the people that rely on this industry for their wellbeing, the counties that rely on this industry in order to provide the services they provide, and the industry themselves. Some of these companies are investing $200-, $300-, $400 million into a project that is going to take 10 years to even get to the point where they can put a hole in the ground. There has to be some level of predictability or they’re not going to invest like that.

People go, ‘Well, minerals are here in Nevada.’ Yes, Nevada has very rich mineral deposits and it’s important. But I do remind folks there are 30 other states across the continental U.S. that do have large mineral deposits, as well. And the reason why people have continued to invest here in Nevada is because of the history of those relationships, and the predictability of Nevada’s tax structure and business climate that it’s had since its inception.