Introduction to Nevada Mining
A prolific mining jurisdiction
Since the discovery of the Comstock Lode in the 1850s, mining has become integral to Nevada, playing a vital role in the state’s economy and culture. Today, mining in Nevada is roughly a US$9 billion industry and represents 6% of the state’s GDP, accounting for 37,000 jobs throughout the supply chain.
Though Nevada has traditionally been known as the ‘Silver State’ because of the abundance of silver, gold has progressively stolen the spotlight. According to the US Geological Survey, if Nevada were a country, it would be the world’s fifth largest gold producer, behind China, Australia, Russia and Canada, representing 4.4% of the world’s production (2020). The state accounted for 75.8% of US gold production in 2020.
Nevada’s mineral endowment is not limited to precious metals. There are over 20 minerals being mined in the state, including lithium and vanadium, which are essential to the expansion of renewable sources of energy and emerging energy storage technologies, as well as copper, iron, molybdenum, gypsum, limestone, sand and gravel.
As far as prolific mining jurisdictions go, it does not get much better than Nevada. The state is regularly among the top contenders in the Fraser Institute’s ranking of the world’s most attractive mining destinations and, in the most recent survey, Nevada finally earned the title as the world’s top mining jurisdiction. Among the reasons for its competitive edge are the state’s remarkable geological potential and a very mining-friendly bureaucracy, with a clear permitting process and a favorable industry tax rate. Over the course of its mining industry history, Nevada has also built up world-class mining infrastructure throughout the state, and is home to a strong mining workforce of experienced professionals.
"Mining companies’ most important contribution is placing people in high paying jobs where they can become their own revenue generators."
Tyre Gray, President, Nevada Mining Association
Working through challenges
While Nevada’s mining industry appears to be on solid ground, it is also working through some challenges. For several years now, the industry has struggled to mine a specific element that is fundamental to its success: new workers. As highlighted by the president of the Nevada Mining Association (NVMA) Tyre Gray: “The mining industry’s largest challenge is workforce development, as it is currently about 500-1,000 jobs under where it should be”.
At nearly every level of exploration and mining companies, as well as the service industries that support them, personnel challenges prevail, and the shortage of drillers and laboratory workers in particular is causing significant delays. This is particularly remarkable considering the industry’s average salary is US$95,000 per year, making it one of the highest paying industries in the state.
What are the reasons behind the current shortage of workers? Many attribute it to the generous unemployment benefits that the government provided to help workers that had been laid off due to Covid-19, which have discouraged them from returning to the labor market.
However, Nevada is also missing certain basic elements to attract new workers, especially in the northern part of the state: “A poor education system and a lack of affordable healthcare, internet and day-care facilities make it hard to attract quality employees, which is why we have over 500 job vacancies within our company currently, of which 200 are professionals,” expressed Greg Walker, executive managing director at Nevada Gold Mines (NGM).
"We believe that the mining industry can be the catalyst for change in our society as long as we collaborate with the government, communities, and private partners.”
Greg Walker, Managing Director, Nevada Gold Mines
In addition, the state faces the perennial struggle of a strong anti-mining sentiment. Today, the industry is a far cry from the days of pickaxes, dangerous working conditions and little concern for the environment, but it still seems unable to shake off its old-fashioned image. The sector is thus making huge efforts to overcome its negative public perception and to expose people to what modern mining looks like in Nevada. “We have one of the best environmental standards in the world and are a technologically advanced STEM industry that thrives on our scientific progressions,” stated Tyre Gray of NVMA.
Nevada has also been facing some challenges on its tax front. In May 2021, after agitated negotiations involving lawmakers, mining lobbyists and the state’s largest teachers union, the Nevada Senate and Assembly approved a proposal to impose an additional tax on mines that will gross more than US$20 million annually. The new tax method preserves the state’s Net Proceeds on Minerals Tax structure, which requires companies to be taxed at less than 5% of net proceeds – which are profits minus deductions. It adds an excise tax of 0.75% on mines that report gross revenue of US$20 million to US$150 million, and 1.1% on mines that report any higher. It contains requirements that the revenue be directed to schools.
Attracting and retaining a skilled labor force
The tight labor market is creating headaches for the mining industry as it seeks to capitalize on strong prices for gold, silver and copper, as well as growing interest in minerals such as lithium. Companies across the value chain are coming up with new ways of attracting and retaining employees. Many are paying higher salaries than ever before, while others are rewarding employees with sign-on bonuses, engaging with employment agencies, or partnering with universities to attract skilled graduates. The industry is also making efforts to ensure a more balanced work-family life and provide growth opportunities for employees.
"We need to change our approach to attracting new employees. There are many people who have worked in mining their whole career and have good skills developed in operational management, IT, and procurement learned in mining environments, but they choose to work for companies in other industries such as Amazon or Google that offer much more attractive employment conditions rather than just salary incentives," argued Ben Howard, COO of the drilling supply specialist American Mining Services.
On a larger scale, both companies and associations in the sector are making substantial investments to develop their surrounding communities to make them more attractive places to live in. A shining example of this is the I-80 Fund, created by NGM and sponsored by companies such as Cyanco, Small Mine Development and Sandvik, which provides small businesses and start-ups the opportunity to secure low interest loans in an effort to develop north-eastern Nevada. In sum, Nevada’s mining industry holds great potential and today, favorable precious metals prices and the strong desire to secure the domestic supply of critical minerals are creating new opportunities and dynamics within in the sector. The following pages will explore how the state’s mining industry has accelerated exploration and production activities in order to make the most of the current boom, and analyze in depth how it is overcoming the present challenges.
Image courtesy of Coeur Mining