Obama Administration calls for 5% royalty on gross proceeds of mines

The Obama Administration has called for a hardrock mining royalty and a new hardrock AML fee, along with other fees and tax increases for coal mining.

Author: Dorothy Kosich
Posted: Wednesday , 16 Feb 2011

RENO, NV - President Obama's Fiscal Year 2012 proposed budget calls for charging a 5% royalty on the gross proceeds of hardrock minerals mined on public lands including silver, gold and copper.

The President is proposing a number of new royalties and fees on both hardrock and coal mining, along with reductions on oil and gas subsidies, which he says will save the country $3 billion over the next 10 years.

The Office of Management and Budget (OMB) said the President's budget "provides a better return to taxpayers from mineral development."

"A number of recent studies by the Government Accountability Office and DOI's Inspector General have found that taxpayers could earn a better return through more rigorous oversight and policy changes, such as charging appropriate fees and reforming how royalties are set," the OMB said.

The President's budget would also establish a new Abandoned Mine Land fee on hardrock mining, "so that the hardrock mining industry is held responsible in the same manner as the coal mining industry."

The agency also suggested the budget "mitigates the environmental impacts of mining by dedicating and prioritizing funds to clean up abandoned mines and by strengthening the regulation of active coal mining." The fee would be based on the volume of material that a mining company displaces.

Senate Majority Leader Harry Reid of Nevada, a longtime advocate of Nevada's gold mining industry, said, "I'm willing to consider any proposal for mining reform that protects the mining industry, doesn't kill jobs and shares revenue with the state."

"I will carefully study the president's proposal to determine whether it meets these criteria and ensures that one of the pillars of the state's economy can continue to create jobs and strengthen the economy," he added.

While Reid's efforts have been successful in the past in stopping the Congress' effort to levy new fees and taxes on the hardrock mining industry, this time Republicans control the House, which may also help U.S. mining.

Meanwhile the President's proposed budget for the Environmental Protection Agency stresses coordinating federal water policy with state and local government, Native American tribes, industry and agricultural sector to achieve goals.

Among those goals are coordinating the actions of the EPA, the Department of the Interior, and the Army Corps of Engineers "to better address impacts of surface coal mining on aquatic resources."

However, House Republicans have proposed cutting the EPA budget by 16% below what President Obama has requested.