Legislature(2019 - 2020)BARNES 124
04/08/2019 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Mining Industry Taxation, Department of Revenue | |
| Presentation(s): Mining Industry Update | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
April 8, 2019
1:32 p.m.
MEMBERS PRESENT
Representative Geran Tarr, Co-Chair
Representative Grier Hopkins, Vice Chair
Representative Sara Hannan
Representative Ivy Spohnholz
Representative Chris Tuck
Representative Dave Talerico
Representative George Rauscher
Representative Sara Rasmussen
MEMBERS ABSENT
Representative John Lincoln, Co-Chair
COMMITTEE CALENDAR
PRESENTATION(S): MINING INDUSTRY TAXATION~ DEPARTMENT OF
REVENUE
- HEARD
PRESENTATION(S): MINING INDUSTRY UPDATE
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
BRANDON SPANOS, Deputy Director
Tax Division
Department of Revenue (DOR)
Anchorage, Alaska
POSITION STATEMENT: Provided a PowerPoint presentation
entitled, "Mining Tax Overview," dated 4/8/19.
KELLY MAZZEI, Excise Audit Manager
Tax Division
Department of Revenue (DOR)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the Department of
Revenue presentation on mining taxation.
DEANTHA CROCKETT, Executive Director
Alaska Miners Association
Anchorage, Alaska
POSITION STATEMENT: Co-provided a presentation entitled,
"Mining Industry Update," dated 4/8/19.
KAREN MATHIAS, Executive Director
Council of Alaska Producers
Anchorage, Alaska
POSITION STATEMENT: Co-provided a PowerPoint presentation
entitled, "Mining Industry Update," dated 4/8/19.
ACTION NARRATIVE
1:32:28 PM
CO-CHAIR GERAN TARR called the House Resources Standing
Committee meeting to order at 1:32 p.m. Representatives Hannan,
Talerico, Spohnholz, Rauscher, Hopkins, and Tarr were present at
the call to order. Representatives Rasmussen and Tuck arrived
as the meeting was in progress.
^PRESENTATION(S): MINING INDUSTRY TAXATION, DEPARTMENT OF
REVENUE
PRESENTATION(S): MINING INDUSTRY TAXATION, DEPARTMENT OF
REVENUE
1:33:28 PM
CO-CHAIR TARR announced that the first order of business would
be a presentation by the Tax Division, Department of Revenue.
1:34:16 PM
BRANDON SPANOS, Deputy Director, Tax Division, Department of
Revenue (DOR), provided a PowerPoint presentation entitled,
"Mining Tax Overview," dated 4/8/19. Turning to slide 3, he
outlined Alaska's mining tax history. He said the tax began in
1913 with the original tax being 0.5 percent on mining net
income of more than $5,000 and no tax for net income less than
$5,000. He explained that the state levies a mining tax on
mining net income and royalties received in connection with
mining properties and activities in Alaska. The Tax Division,
he noted, collects Mining License Tax primarily on those
engaging in coal and hard-rock mining.
MR. SPANOS moved to slide 4 and noted numerous changes were made
to the tax between 1915 and 1953. In 1951, the Territorial
Legislature authorized the three and one-half-year exemption for
all new mining operations, he related, which is still in statute
today. In 1955, he continued, the current tax structure was
adopted: no tax on mining income of $0-$40,000; 3 percent tax
on mining income between [$40,0001] and $50,000; and up to 7
percent tax on mining income over $100,000.
1:36:29 PM
REPRESENTATIVE HANNAN asked whether the amount of money entailed
by the three and one-half-year exemption has been calculated and
whether the exemption's goal is to give an operation the
opportunity to break even before the state starts taxing it.
MR. SPANOS replied he doesn't know whether a calculation on the
lost revenue has been done. He said most mines operate at a net
loss in the first year or so, therefore [the tax loss] would
generally be minimal. The number of those trying to claim the
credit is in the double digits, he continued, and only about
seven have ever been approved.
REPRESENTATIVE HOPKINS inquired how Alaska compares to other
states for mining taxation.
MR. SPANOS responded the tax structure is relatively unique in
that the tax is based on income, so it is structured like an
income tax. In most states the tax is a true severance tax
based on either weight or value of the product, he explained,
whereas Alaska's is a severance tax that is based on the net
income of the operation.
CO-CHAIR TARR offered her understanding that the exemption is
for three and one-half years from the day that the mine is
considered operational.
MR. SPANOS confirmed no tax is paid for three and one-half years
from the date of initial production.
1:38:30 PM
MR. SPANOS resumed his presentation. Showing slide 5, he stated
that anyone who is operating, or extracting, or attempting to
extract, valuable metals, ores, or minerals must have a mining
license. The mining license is in lieu of a business license,
he explained, so it is on any miner, even those who are doing
small suction dredging or placer mining, although it is unlikely
they would pay any tax. There is no license through the
Department of Commerce, Community, and Economic Development, he
continued, so DOR is the licensing body. One taxpayer may hold
multiple licenses on the property he/she is mining, he added.
There are no fees for the mining license and anyone operating
without a license is guilty of a misdemeanor.
REPRESENTATIVE HANNAN inquired about the cost of a typical
business license for a corporation.
MR. SPANOS replied that a business license is issued for two
consecutive years and costs $100.
MR. SPANOS continued his presentation. Addressing slide 6, he
said the different mining license types are coal, hard rock,
open pit, placer and suction dredging. Coal mining is the
removal of coal, he noted, while hard rock mining usually
entails drilling shafts into a rock face, using explosives, and
then crushing the removed rock to extract the minerals. Open
pit mining is the digging of a pit, he stated, and placer mining
recovers valuable minerals from loose gravel. Ninety percent of
the licenses are for placer or suction mining, he added.
MR. SPANOS turned to slide 7 and reviewed the three license
categories. Two types of licenses are issued for an owner, he
said. An owner/operator owns and operates his or her own mine
and an owner/lessor owns and leases to someone else to operate
the owner's property. The third type of license, he continued,
is the lessee/operator that leases the property from an owner.
He explained the license category matters because the owner of
the property is the only one who can take the depletion
deduction, so DOR wants to know who that is.
MR. SPANOS displayed slide 8 and noted that a mining license is
not required for someone who is: merely holding property for
exploration; holding a mineral interest in undeveloped and non-
producing land; or mining sand, gravel, quarry rock, or earth.
He pointed out that sand, gravel, quarry rock, and earth mining
was exempted from taxation in 2012.
1:42:35 PM
MR. SPANOS turned to slide 9 and said anyone holding a mining
license, or anyone that should be holding a mining license, must
file a Mining License Tax return. This would include anyone who
is extracting or attempting to extract valuable minerals from
the earth, he continued, as well as anyone who is a royalty
recipient. Royalty recipients pay taxes on the royalties they
receive, he added, and those that are paying the royalty get
that as a deduction on their tax return. Moving to slide 10, he
said the tax return is an annual return that is due before the
first day of the fifth month following the taxpayer's fiscal
year end, or for calendar year taxpayers, the return is due by
th
April 30. He said a 6-month extension would be provided if
[the requisite] form were filed.
1:44:02 PM
REPRESENTATIVE HANNAN asked who would be a fiscal year taxpayer,
as opposed to a calendar year taxpayer.
MR. SPANOS replied it would depend upon how the corporation or
company is formed. A company would choose fiscal year as
opposed to calendar year based on its business practices and
would make the election with the Internal Revenue Service (IRS).
A fiscal year can be the end of any month, he explained; for
example, if the mining is only occurring in the summer the
taxpayer may want the fiscal year to end right after the summer.
REPRESENTATIVE HANNAN noted that the number of mining companies
paying tax to the State of Alaska is small. She inquired
whether DOR knows all of their fiscal years.
MR. SPANOS responded that in 2014 DOR started a new system, the
Tax Revenue Management System, for which the legislature
appropriated the money. This system allows DOR to have better
reporting and better confidence in its numbers and data, he
said. As far as fiscal year versus calendar year, he continued,
there are roughly 500 taxpayers in the mining tax world, while
in the corporate tax world there are about 17,000 taxpayers that
have calendar year and fiscal year end dates, with many more on
fiscal years than in the mining group. He said the department's
reports are fairly straightforward and DOR can run those reports
and see who is on which. The number of taxpayers that actually
pay the Mining License Tax is fairly small, he said, but he
doesn't have that number with him today. He explained that the
report is done on the state's fiscal year, so a tax received in
the state's fiscal year is reported in that fiscal year.
1:47:31 PM
MR. SPANOS resumed his presentation. Continuing with slide 10,
he said that shortly after [funding] the Tax Revenue Management
System in 2014 the legislature passed a statute requiring that
all returns be filed electronically. However, he noted, a
waiver from filing an electronic tax return can be granted. The
mining tax world has the most waivers, he continued, with about
50 percent of the returns filed electronically and rest filed on
paper. If a taxpayer files on paper without having a waiver, a
$25 penalty for 1 percent of the tax due is incurred, so in a
case of the mining license it is usually $25 that the taxpayer
is paying. The larger taxpayers that actually pay tax would
either have a waiver or file electronically.
MR. SPANOS moved to slide 11 and reviewed how the Mining License
Tax is calculated. The tax is based on net income, he said, and
net income is the gross income [from mining operations] less
deductions [of allowable mining expenses]. Mining gross income,
he explained, includes everything from the value received from
selling the mineral all the way up to the fair market value of
the product that is shipped out of the state. If the product is
[not sold, but is] shipped out of the state, [DOR] cannot track
it any longer and therefore the income is based on what should
have been received when the material was shipped out. He said
allowable deductions include depletion, direct expenses, and
indirect expenses. Direct expenses include such things as
royalties paid, fuel, oil, development costs, extraction costs,
maintenance and repairs, salaries, transportation costs, and
depreciation of mining equipment. Indirect expenses include
advertising, insurance, legal and professional fees, office
supplies, rent for the office, utilities, and overhead. He said
expenses disallowed as a deduction include exploration costs,
federal income tax, losses on the sale of mining equipment, net
operating losses, and other capital losses.
1:49:45 PM
REPRESENTATIVE RASMUSSEN asked whether any recent studies have
compared Alaska's mining tax system to those in the Lower 48.
MR. SPANOS answered that no studies have been done, but hearings
[have been held] in the past. The previous administration
proposed to increase the tax, he said, and there were many
discussions about what that would look like. At one point a
task force was proposed to look at the structure of the tax and
compare it to other states, but that never came to fruition.
1:50:31 PM
REPRESENTATIVE TALERICO requested confirmation that exploration
cost is not an allowable deduction.
MR. SPANOS confirmed exploration cost is not an allowable
deduction. But, he continued, a credit is available and will be
reviewed later in the presentation.
REPRESENTATIVE TALERICO related he knows of a mine that spent
millions of dollars on exploration costs so the mine could
expand. He surmised those costs wouldn't count as a deduction
against the Mining License Tax.
MR. SPANOS replied correct.
1:51:12 PM
REPRESENTATIVE RAUSCHER asked how many mines in Alaska actually
pay a tax.
MR. SPANOS offered his belief that about 10 mines are the major
taxpayers. He deferred to Ms. Kelly Mazzei to answer further.
KELLY MAZZEI, Excise Audit Manager, Tax Division, Department of
Revenue (DOR), answered that a few years ago DOR broke out the
numbers by tax brackets: 10 taxpayers were in the uppermost tax
bracket of 7 percent with a net income of over $100,000, and 19
taxpayers were in the 5 percent tax bracket with a net income
between $40,000 and $100,000. The majority of taxpayers, about
400, had a net income between $0 and $40,000 and therefore did
not pay a tax.
1:52:51 PM
REPRESENTATIVE SPOHNHOLZ requested the definition of depletion.
MR. SPANOS said he would be discussing depletion later on.
1:53:08 PM
REPRESENTATIVE TUCK inquired as to how and who sets the [fair
market] value of mined material that isn't sold in Alaska [but
is shipped out of the state]. He further inquired whether that
has been tested to ensure that that would be the value. He
clarified he is asking whether the Tax Division sets the fair
market value or verifies it through audit.
MR. SPANOS answered that when a taxpayer is regularly exporting,
generally the mined material is sold somewhere, so [the Tax
Division] would base it on that value if it were an arms length
transaction. If it weren't an arms length transaction, he
continued, [the Tax Division] would look at what it is sold for
in the market. The number of taxpayers is fairly small, he
added, so the division is able to work with taxpayers when the
division has a question. If it is in the course of an audit,
the division will generally take the state's best interest to
heart when looking at that fair market value. However, he
noted, a taxpayer that disagrees always has appeal rights.
REPRESENTATIVE TUCK asked whether disagreement happens often.
MR. SPANOS replied the fair market value issue happened more
often when the division was dealing with sand and gravel while
not a lot of these materials were exported, there was a fair
market value calculation. He said he couldn't recall it being a
dispute issue in recent years.
1:54:57 PM
REPRESENTATIVE RASMUSSEN requested the definition of an arms
length sale for the Tax Division's purposes.
MR. SPANOS responded arm's length would be that a third party is
involved. If an entity were selling to a sister entity, it
would not be an arm's length transaction. It is based on
ownership of each company, he said.
MR. SPANOS displayed slide 12 and continued his presentation.
He explained that depletion is the term used for "depreciation
of a mineral property used to extract a natural resource." He
said development costs are capitalized and then depleted using
one of two allowable methods - cost depletion and percentage
depletion. Alaska statute defines both methods, he stated, and
provides that the taxpayer can use the method that gives the
taxpayer the most benefit. The percentage depletion cannot
exceed 50 percent [of a taxpayer's net income], he noted, and
the statute says a taxpayer gets percentage depletion unless
cost depletion is more favorable.
MR. SPANOS moved to slide 13 and explained that under cost
depletion, the most traditional method, total development costs
are deducted over an estimated life of the mine. Once all
development costs are deducted or depleted, a cost depletion
expense is no longer allowed, he explained. He said cost
depletion is limited to the cost basis of the mine and is
calculated as follows: the deplete rate is the cost basis
divided by estimated number of recoverable units and then the
depletion rate is multiplied by the number of units sold.
1:57:17 PM
REPRESENTATIVE RAUSCHER asked what the second largest taxpayer
is next to the oil industry, as far as natural resources. He
clarified he is meaning the amount of taxes the taxpayer has to
pay based on the taxpayer's revenue, so the percentage.
MR. SPANOS answered he would get back to the committee on that.
However, he noted, in 2018 the fishing industry paid about $46
million in Fishing Business Tax and $9.7 million in Resource
Landing Tax, plus the fishing industry has other taxes. He said
that in fiscal year 2018 roughly $47.3 million was paid in
Mining License Tax, so the fishing industry paid more in 2018.
REPRESENTATIVE RAUSCHER asked whether mining and fishing are it.
MR. SPANOS replied he believes so.
1:59:03 PM
REPRESENTATIVE HANNAN inquired how the division determines the
number of years that cost depletion is going to be taken out;
for example, whether it is the permitted life of the mine.
MR. SPANOS reiterated that there are two different types of
depletion. Cost depletion is over the estimated life of the
mine, he said; [the number of] recoverable units would be
estimated and that [number] used to calculate the depletion
until it is fully depleted. He pointed out that the mine could
continue to operate after the depletion is fully taken.
REPRESENTATIVE HANNAN asked who tells the division what the
estimated life of the mine is the operator, the agencies
giving the operator permits, or some other factor.
MR. SPANOS responded it would be the operator and the operator
would have specialists who determine how many recoverable units
there are.
REPRESENTATIVE HANNAN inquired whether the life of the mine
expenditure typically matches what the mine is permitted for.
MR. SPANOS answered that the division sees cost depletion fully
depleted and mines still operating, and so an analysis would
need to be done to see if that is typical.
MR. SPANOS returned to his presentation and addressed slide 14.
He explained that percentage depletion is based on a percentage
of the gross income [less royalties paid]. The percentage
amount is spelled out in statute and is based on what mineral is
being extracted, he said; for example, the percentage depletion
for coal mines is 10 percent and for sulphur mines it is 23
percent. The depletion deduction is capped at 50 percent of the
net income of the taxpayer, he continued, and can be taken after
the costs are fully depleted from the development of the mine.
REPRESENTATIVE TUCK asked whether both methods could be used or
only one or the other.
MR. SPANOS replied that a taxpayer gets one or the other method
in each year, whichever method is most beneficial to the
taxpayer. So, both methods can be used over various years, he
continued, but only one method can be used per year.
2:02:02 PM
MR. SPANOS resumed his presentation. Turning to slide 15, he
discussed the three and one-half-year mining tax exemption. He
noted that since 2001 approximately 26 requests for exemption
have been received - 19 were denied and 7 were granted. The
exemption statute spells out that it is basically for a new mine
operation, he explained, so an [Affidavit of Initial Production]
must be filed with the Department of Natural Resources (DNR)
spelling out why it would be a new mine. The mine is analyzed
by DNR, he continued, and if DNR believes it falls under the
definition of a new mine it will let DOR know and the new mine
will receive a three and one-half-year exemption. He said
considerations that might go into that determination include
whether the prior owner has paid taxes, the location of the
mine, geological structure, mining techniques and technology,
and new capital invested.
REPRESENTATIVE RAUSCHER inquired what the average reason might
be for why the 19 exemption requests were denied.
MR. SPANOS responded it would be if the land has been previously
mined, because if it has already been mined someone cannot claim
it is a new mine.
CO-CHAIR TARR asked whether the denied exemption requests were
primarily because the land had been mined before.
MR. SPANOS answered he would have to get back to the committee,
but that that typically is the reason. The statute says if tax
has been paid on it before it is an indication that it has
obviously been mined before. He said the categories that are
looked at are to determine whether it is a new mining operation
or the mine is being started up again. In further response to
Co-Chair Tarr, he suggested Ms. Mazzei be asked the question.
MS. MAZZEI replied that in her experience most denials for
exemptions are because it is not considered a new mining
operation. The reasons could have to do with the technology
used and what type of new capital is invested, she said.
Sometimes an applicant believes it is a new mining operation
because a significant amount of money was spent in considering
new mining technology and new assets. However, the exemption
request will most likely be denied, she continued, if the
applicant cannot prove beyond a reasonable doubt that it is a
brand-new technology and not just maintaining or repairing old
technology. Another reason, she added, would be if an applicant
tried to stay on a mining location in an area that has not been
mined before and therefore the applicant thinks it is a new
mining operation; but if it is adjacent to, or could be
considered part of, a previous mining operation that exemption
request would probably be denied.
2:06:04 PM
REPRESENTATIVE HANNAN offered her understanding that a mine
operation doesn't have to be entirely new property [to qualify
for the three and one-half-year exemption]. An applicant for
the exemption could reach out into new boundaries, but in areas
not mined before, and could be using new technology in a new
shaft. She posed a hypothetical scenario in which a new vein is
discovered 100 yards away in another direction at the Kensington
Gold Mine currently operating in her district. She surmised
that when Kensington filed to get into that new underground
vein, it could be considered a new mine even though shore-side
and top-side the same physical plant would be operating it.
MS. MAZZEI responded correct. Paraphrasing from parts of the
regulation, she related that the following would be looked at:
geological structure of the ore body in relation to other ore
bodies the person mines; the mining techniques and technology
used; and the extent to which the person is required to invest
new capital, employ different personnel, and use additional
facilities to exploit the resource. The exemption statute is
under Title 38 of the Department of Natural Resources, she
pointed out, so DNR usually looks at the details of the mining
operation more than does the Tax Division and DNR makes a
recommendation. Determining the eligibility for the exemption
can become quite complicated and is not necessarily black and
white, she noted. It can take quite a bit of research and
geographical mapping to come up with a determination.
REPRESENTATIVE HANNAN inquired whether three and one-half years
is a common length of time for an exemption in most states that
have operational mines.
MR. SPANOS answered he doesn't know whether other states have an
exemption for new mines. He said he would get back to the
committee.
REPRESENTATIVE RASMUSSEN stated she is also curious about the
amount of time because her understanding from a previous
presentation is that it takes 15-17 years to have the permits
done in Alaska. How Alaska compares to other states needs to be
considered by the committee, she said.
2:10:27 PM
MR. SPANOS moved to slide 16 and continued his presentation. He
reviewed Alaska's two mining tax credits, the Exploration
Incentive Credit and the Education Tax Credit. He explained
that a person could receive a credit for exploration costs
incurred up to $20 million. Exploration costs include
surveying, drilling exploration holes, [conducting underground
exploration, sampling, and aerial photography]. The Education
Tax Credit was expanded and extended in 2011 and 2014, he
continued, and only four taxpayers have claimed this credit in
the Mining License Tax; most of the claims for this credit are
taxpayers in the corporate income tax.
REPRESENTATIVE TUCK asked whether the state approves the
Exploration Incentive Credit before the activity takes place or
during the activity.
MR. SPANOS replied it is claimed on the tax return, so is after
the fact. To his knowledge, he said, the division doesn't
approve those credits. He deferred to Ms. Mazzei to answer.
MS. MAZZEI responded that exploration expenses are incurred
before applying for the credit and taking it on the tax return.
She said taxpayers use Form 665 to file for The Alaska
Exploration Incentive Credit, which is available to payers of
the Alaska Mining License Tax, the Corporation Net Income Tax,
and through DNR's Production Royalty Tax.
REPRESENTATIVE RAUSCHER asked how much the Exploration Incentive
Credit has cost the State of Alaska.
MR. SPANOS replied that the state has had no claims for that tax
credit in the Mining License Tax. He said he would get back to
the committee regarding how much credit has been claimed under
the Corporation Net Income Tax and the Production Royalty Tax.
REPRESENTATIVE RAUSCHER said he would also like to know how much
the four mines have contributed to the state's revenue.
MR. SPANOS replied that the four mines he mentioned had claimed
the Education Tax Credit, not the Exploration Incentive Credit.
REPRESENTATIVE RAUSCHER asked whether the mines have benefitted
from the Exploration Incentive Credit.
MR. SPANOS reiterated that no one has claimed the Exploration
Incentive Credit in the Mining License Tax.
2:14:40 PM
REPRESENTATIVE HANNAN requested an explanation of the Education
Tax Credit.
MR. SPANOS qualified the credit has changed over time and he is
going from memory, but explained that the taxpayer would get a
portion of the first $100,000 spent, which he thinks may now be
up to 100 percent, and the taxpayer would get a portion of the
next $100,000 spent.
REPRESENTATIVE HANNAN asked where the money would have been
spent; for example, whether it was contributed to a school
district or the workers got masters degrees in geology.
MR. SPANOS answered it is for contributions to education, which
includes secondary education, so colleges are generally the
largest recipients of the donations.
REPRESENTATIVE HANNAN surmised the University of Alaska College
of Mines might be a common recipient of donations. She surmised
the donation could then be used as a deduction by the taxpayer.
MR. SPANOS clarified it would be a credit on the taxpayer's
taxes. The credit has been expanded to fit more than just the
traditional colleges, he said, so the donation could be to a
nonprofit as an education charter.
REPRESENTATIVE HANNAN inquired whether it would include school
districts for grades K-12 and observed that people were shaking
their heads no to the question.
CO-CHAIR TARR recalled a presentation by a University of Alaska,
Fairbanks, professor in which it was stated that Greens Creek
Mine donates to the mining certification program.
REPRESENTATIVE RASMUSSEN asked whether companies are able to
have a fund that reimburses their employees for education and
whether a company could apply for the Education [Tax Credit] if
the company pays the tuition directly for an employee.
MR. SPANOS answered a company would need to structure it so that
it is a charitable contribution. If a company just pays for an
employee's education, he continued, it would not be considered a
contribution to a charitable organization. He said a company
could set up a nonprofit, contribute to that nonprofit, and have
the nonprofit determine where that money goes, which could be
for the company's employees.
2:17:30 PM
CO-CHAIR TARR expressed her surprise that no one has applied for
the Exploration Incentive Credit. She asked whether this credit
is a new addition to the tax structure.
MR. SPANOS replied no, it isn't new. He said the division finds
that most of the education credits are claimed in the
corporate income tax world. They are available in many
different tax types, he said, including mining, oil and gas
production, oil and gas property, but generally are claimed on
the corporate tax return.
CO-CHAIR TARR offered her understanding that the aforementioned
answer from Mr. Spanos was for the Education Tax Credit. She
inquired whether the taxpayer must choose to use one or the
other of the two credits. She explained that in relation to the
three and one-half-year exemption, she is trying to determine
why taxpayers wouldn't want to have the Exploration Incentive
Credit applied against their taxes. She asked whether it is a
mathematical calculation that would favor one over the other.
MR. SPANOS responded he suspects the taxpayers are claiming the
Exploration Tax Credit in a different tax type. He said he is
more familiar with the Education Tax Credit. A taxpayer cannot
take the same tax credit in multiple tax types, he explained;
the credit can only be taken in one tax return or can be broken
up over multiple tax returns, but it's simpler to take it on
one. He said he would analyze it and get back to the committee
with an answer.
MR. SPANOS returned to his presentation. Displaying slide 17,
he provided a five-year comparison of revenue from the Mining
License Tax for the state's fiscal years (FYs) 2014 to 2018. He
reiterated that the Tax Revenue Management System was rolled out
in 2014 and said the division is comfortable with the number of
taxpayers [being accurate] in FY 2015. But, he continued, the
number was perhaps undercounted in FY 2014 when the division's
recording was done in a folder system. He said $47.3 million
was collected in tax from 423 tax returns in FY 2018, but 10
companies are paying the majority of the tax.
2:20:17 PM
REPRESENTATIVE HOPKINS observed on slide 17 that the revenue
coming into the state was up and down over the five years being
compared, plus new mines seem to inversely relate to the amount
of money that came in. He noted the total revenue was $23
million [in FY 2014 with 366 taxpayers], $38 million [in FY 2015
with 468 taxpayers], $11 million [in FY 2016 with 503
taxpayers], $41 million [in FY 2017 with 462 taxpayers], and $46
million [in FY 2018 with 423 taxpayers]. Observing that the
revenue [went down to] $10 million in FY 2016 when the number of
taxpayers [went up to] 503, he asked what causes such
discrepancy year to year.
MR. SPANOS answered that the number of taxpayers doest
correlate at all to the revenue because it is primarily 10
taxpayers that are paying that revenue. He said the large
number of licenses being seen could just be suction dredgers in
Nome. The division has a hard time getting certain taxpayers to
get a license, he noted, so it could just be that one year they
decide to be compliant and the next year they decide not to be
compliant. There may be the exact same number of miners from
year to year but a different number of licenses from year to
year. Therefore, he continued, the revenue is the better thing
to look at. The revenue is dependent upon the value of the
minerals being sold - if zinc prices go down, revenue will go
down, and if gold prices go up, revenue will go up. This is
because the tax is based on net income, he explained, not on how
much is mined, although that is a factor.
REPRESENTATIVE HOPKINS asked whether that means there was a 75
percent drop in the value of the commodities sold in Alaska in
FY 2016.
MR. SPANOS replied it might not correlate that directly.
Commodity prices might have gone down or expenses could have
gone up, and other factors that could also weigh into that. He
deferred to the industry for help with an answer because the Tax
Division is the revenue collector and sees things after the
fact. The division verifies numbers, he continued, but doesn't
necessarily have the expertise as to what factors drove the drop
in net income.
2:22:49 PM
REPRESENTATIVE TUCK asked whether the CBR Fund on slide 17 is
the Constitutional Budget Reserve Fund.
MR. SPANOS responded correct.
REPRESENTATIVE TUCK inquired whether that is the result of
litigation.
MR. SPANOS answered the constitutional language would lead one
to think that, but actually it has been interpreted by the
courts to mean that the beginning of a litigation is an
assessment. Any audit assessment or revenue letter, even a $25
penalty for non-electronic filing of a tax return, he said, are
all assessments that would go into the CBR Fund once paid.
REPRESENTATIVE TUCK offered his understanding that any
assessment that has gone to court goes into the CBR Fund
automatically.
MR. SPANOS replied that that was the division's interpretation
at one time. However, the [1994] Hickel v. Halford decision
stated it didn't even have to go to court, he said. So long as
the division sent the taxpayer a notice and demand for payment,
that was the beginning of the litigation regardless of whether a
litigation actually happened, and therefore the division needs
to transfer the money into the CBR Fund if a payment is made on
an assessment. So, he continued, any assessment in the Mining
License Tax would be paid into the CBR Fund.
REPRESENTATIVE TUCK offered his understanding that it doesn't
have to go to court. He asked how the final assessment is
determined.
MR. SPANOS responded it could be just a simple audit. He added
it would be a notice and demand for payment, so if it shows up
on that demand it would be considered CBR.
MR. SPANOS noted his presentation is complete.
CO-CHAIR TARR outlined the questions needing follow-up: the
number of taxpayers; the use of the Exploration Incentive Credit
versus the Education Tax Credit, and comparison of the three and
one-half-year exemption to the timeline of how long it takes for
a mine to come on line.
MR. SPANOS said the division would be sure to respond to those
questions.
2:25:59 PM
The committee took a brief at ease.
^PRESENTATION(S): MINING INDUSTRY UPDATE
PRESENTATION(S): MINING INDUSTRY UPDATE
2:27:01 PM
KAREN MATHIAS, Executive Director, Council of Alaska Producers,
co-provided the PowerPoint presentation entitled, "Mining
Industry Update," dated 4/8/19. She began the update with a
"safety moment" in which she urged that any committee members
taking a tour of a mine to please take the safety glasses home
and use them.
2:27:32 PM
DEANTHA CROCKETT, Executive Director, Alaska Miners Association,
co-provided the presentation entitled, "Mining Industry Update,"
dated 4/8/19. She displayed side 2 and outlined the topics she
would be discussing. Moving to slide 3, she pointed out that
everyone is dependent upon the extraction of minerals for the
mine products that people depend on. To illustrate this she
showed slide 4 with a photograph of turbines at the Fire Island
Wind Farm in Cook Inlet and explained that no matter the source
of renewable energy, it takes a substantial amount of minerals.
Hybrid vehicles take almost twice as much copper as traditional
vehicles, so the mining industry has a huge part to play in
renewable energy, she said. Turning to slide 5, she noted that
gold, silver, copper, and tungsten are some of the metals in
cell phones. Alaska has three primary gold producers and one of
the nation's top silver producers, she continued, so it is
possible that Alaska minerals are in the phones of Alaskans.
MS. CROCKETT displayed slide 6 and said the red stars on the map
of Alaska depict producing mines [Red Dog, Fort Knox, Northern
Star Pogo, Usibelli, Kensington, Greens Creek], the blue
triangles depict projects in permitting [Donlin, Pebble]; and
the green stars depict advanced exploration projects [Upper
Kobuk, Graphite Creek, Livengood, Palmer].
MS. CROCKETT addressed the producing mines. She related that
Red Dog Mine is located on NANA Regional Corporation land, is
the largest lead and zinc producer in the U.S., and has about
600 employees. She stated Fort Knox is in its twenty-third year
of operation, is [Alaska's] largest producing gold mine, and has
640 employees who drive between work and home each day. Fort
Knox has expanded into its Gilmore deposit this year, she
continued, which will extend the life of the mine. She said
Pogo is the only mine located entirely on state land, has been
mining since 2006, has 320 employees, is currently the eighth
largest gold producer in the U.S., and was acquired last year by
Northern Star Resources, a company new to Alaska. She reported
that Usibelli Coal Mine, the state's only coal mine, has been
operating since 1943, has about 100 employees, and provides 39
percent of Interior Alaska's electricity generation. She said
Kensington Gold Mine began producing gold in 2010, is currently
undergoing exploration to extend the life of the mine, and at
387 employees is Southeast Alaska's second largest private
employer in terms of payroll. She stated that Greens Creek Mine
is the largest silver producer in the U.S., is one of the top
ten producers worldwide, and at 420 employees is the largest
private employer in Southeast Alaska in terms of payroll.
MS. CROCKETT addressed the two projects currently in permitting.
She stated that late last year Donlin Gold Mine saw a final
environmental impact statement and joint record of decision from
the U.S. Bureau of Land Management (BLM) and the U.S. Army Corps
of Engineers (USACE). Donlin anticipates 1,000 production jobs
depending on that production timeline, she noted, and during its
camp operations the mine had a 90 percent Calista Corporation
shareholder hire rate. She said the other project in permitting
is the Pebble Mine, a project on which the committee has already
heard three presentations.
MS. CROCKETT addressed the advanced exploration projects. She
stated Alaska has a lot of exploration, but explained that
advanced exploration projects are considered advanced because
the viability and economic feasibility of those projects are
being looked at. She noted that much of the Upper Kobuk Mineral
Projects is (UKMP) is taking place on NANA Regional Corporation
land and extensive viability and economic feasibility studies
have been done. She said Graphite Creek is a graphite deposit
near Nome that is looking at its economic assessment, and the
Livengood gold deposit north of Fairbanks recently completed a
second feasibility study. She related that the Palmer Project
near Haines is a deposit of zinc, copper, gold, and silver that
is going through a preliminary economic assessment.
MS. CROCKETT pointed out that the more than 200 active placer
mines in the state are not shown on the map. While typically
smaller in nature, she said, they do have a big impact on
Alaska. She called attention to the yellow dots on the map
located all over the state and explained that they are
communities where mining employees live.
2:29:40 PM
REPRESENTATIVE RASMUSSEN asked what the placer mines mean in
terms of jobs and what they bring economically to the state.
MS. CROCKETT replied that a couple years ago the Alaska Miners
Association looked at the economic benefits of just the placer
mining industry because it was being said that placer mines in
aggregate constituted a seventh large mine in Alaska. It turns
out this is right, she continued. Over 1,100 jobs are provided
and he economic benefits in terms of wages, procurement, and
taxes paid are very similar to one of the large mines. She said
she would get back to the committee with specific numbers.
2:30:14 PM
REPRESENTATIVE HANNAN noted Livengood is an area where mining
has occurred for over 100 years. She surmised that the mining
was by individual placer miners and asked whether it is likely
that Livengood will be considered a new mine when it comes on
line since a new corporation is developing it versus many
individual miners 100 years ago.
MS. CROCKETT confirmed Livengood was discovered as a result of
placer operation, which found a load deposit that was determined
to have the resources for developing a large mine. She stated
it would be different investors and a different permitting
system altogether and that while she cannot say in certainty
[that it would be considered a new mine, it would be a very new
type of mining and new application of mining. She said she
would get back to the committee.
MS. CROCKETT resumed her presentation. Displaying slide 7, she
answered the question of, "Why mine here in Alaska?" She said a
superb job at mining is being done in Alaska and the mining
operations and the agencies regulating them account for what is
a world class regulatory system. She stated that Alaska's mines
are permitted for the protection of air, land, water, fish,
wildlife, and human health and that the strict regulatory
oversight throughout a mine life doesn't end when the mine
closes. Extensive planning takes place beforehand for closure,
she said, and oversight of the mine continues post-closure for
reclamation and restoration of the site. Also, she added, there
is tailored financial assurance, meaning that if for some reason
the state must step in and perform that reclamation, the money
is there to cover the cost.
MS. CROCKETT explained slide 8 depicts what it takes to permit a
mine in Alaska and that this information was provided by the
Department of Natural Resources (DNR).
2:32:04 PM
REPRESENTATIVE HOPKINS brought attention back to slide 7 and
asked whether it is Alaska's regulatory system that Ms. Crockett
is saying is world class.
MS. CROCKETT confirmed she was referring to Alaska's regulatory
system because in a number of cases Alaska has gone above and
beyond in its permitting and oversight of mining operations.
MS. CROCKETT returned to slide 8 and explained it is an example
of the approval process to permit a large mine in Alaska. She
pointed out that dozens of local, state, and federal agencies
are involved in this process and that the permits listed on the
slide are those that are typical for a mine that is being
permitted on state or privately held land. She noted that a
mine located on federal land would have a significant number of
additional permits, such as those that are under the BLM or the
U.S. Forest Service (USFS) mining regulations. The permits
listed on slide 8, she continued, contain multiple stipulations
that are in addition to the compliance with Alaska's statutes
and regulations. Alaska's permitting agencies can, and often
do, prescribe additional practices to the operations to be
performed that are outside of Alaska's governing laws. It is
important to understand, she added, that this permitting process
and all of these permits being obtained by a developer do not
guarantee approval. Achieving each and every one of these is a
back-and-forth project between the developer and the agencies,
she said, and throughout this process there are multiple
opportunities for public participation.
REPRESENTATIVE HOPKINS inquired how Alaska compares to other
states in terms of state permits that are required for such
things as air, water, fish, and habitat.
MS. CROCKETT responded that the mines being permitted on federal
land would have a lot of similarities, but offered her belief
that mines being permitted on state or privately owned land
would be more specific to Alaska. She said she would get back
to the committee with a side-by-side comparison.
2:38:07 PM
MS. CROCKETT resumed her presentation. Displaying slide 9, she
said Alaska has one of the best water quality monitoring systems
in the world with respect to mines. Alaska's three-part system
has some unique requirements that set it apart from other
jurisdictions, she explained. First, Alaska does the standard
water quality monitoring. Second, Alaska goes a step further
with biomonitoring, uncommon in other jurisdictions, in which
the Alaska Department of Fish and Game (ADF&G) oversees
monitoring of benthic algae and fish, including metals uptake by
fish and their habitat and population. Third, Alaska requires a
third party audit. This transparent public process monitors the
company's compliance as well as the agencies that monitor the
company's reporting and results.
REPRESENTATIVE RAUSCHER requested Ms. Crockett to speak to the
improvement of the water in Red Dog Creek once mining began.
MS. CROCKETT confirmed that this is right. Due to naturally
occurring mineralization, she said, the creek water was devoid
of aquatic life. When the mine went in, the required treatment
of the mine's wastewater actually cleaned up Red Dog Creek and
made it hospitable to aquatic insects, vegetation, and fish.
REPRESENTATIVE TUCK requested an explanation of the three
pictures on slide 9.
MS. CROCKETT replied that the left picture is phytoplankton, the
middle picture is aquatic insects, and the right picture is a
fish. She said these three things are what ADF&G monitors when
conducting water quality monitoring around a mine site.
2:38:03 PM
MS. CROCKETT returned to her presentation and displayed slide 10
as an illustration of Alaska mines doing it right. Fish Creek
near the Fort Knox Mine is an example of doing things outside of
the governing statutes and regulations, she said. Placer mining
took place here during the Fairbanks gold rush of the 1900s, she
recounted, and left behind a barren area uninhabitable by the
native fish populations. Fort Knox didn't operate in this area,
she continued, but development of the mine created opportunities
to fix the damage and revitalize the fisheries. The mine worked
with ADF&G to construct the stream channels seen in the upper
right photo, she explained, which provided for fish passage
between isolated ponds. The vegetation was diversified from
mainly black spruce to shrubs, willows, and other plants that
moose love. This area essentially became a fish and wildlife
sanctuary, she said. She related that ADF&G's restoration goal
for fish size and population was achieved in two years. She
noted that summaries of the ongoing monitoring of this
successful project are available on DNR's web site.
MS. CROCKETT turned to slide 11 and discussed reclamation and
closure. She explained that Alaska law [AS 27.19] requires that
a mine's reclamation and closure plan be approved by DNR before
operations can begin. Mines must also provide financial
assurance in the event the obligations cannot be performed, she
said, and the amount of that assurance must also be approved
before operations begin. Financial assurance applies to all
companies regardless of where they are headquartered and to all
mines regardless of the land status that they are located on.
She noted that third party reviewers evaluate the operation and
reclamation plans and conduct oversight of the state and federal
agencies that are regulating the operation and approving the
reclamation plan. Alaska is the only state that does this in
terms of mining, she added.
2:40:29 PM
KAREN MATHIAS displayed slide 12 and highlighted the findings of
a recent economic impact study done on mining by the McDowell
Group. She reported that the mines provide 4,500 direct jobs,
plus thousands of jobs in transportation, environmental
management, and camp services, all jobs that are paid for by the
mine even though they aren't direct employees. The [average
annual] salary of jobs in the mining industry is $102,000, she
said, which is twice the state average. These jobs tend to be
year around and many are in rural areas, she continued, and
mining is important to regions in Alaska. Additionally, she
said, many businesses contract with the large mines - the last
numbers show about half a billion dollars in procurement with
Alaska businesses.
MS. MATHIAS turned to slide 13 and reviewed the benefits to
Alaska Native corporations. The story of mining in rural Alaska
is more than just the data, she said. For example, Red Dog Mine
has had a positive impact on people's lives in Northwestern
Alaska; with 55 percent of Red Dog's employees are NANA Regional
Corporation shareholders. She related that when sending out the
agreement for the mine's construction back in the 1980s, NANA
wanted royalties as well as opportunities for its people to work
in the mine and to have contracting opportunity. So, she
continued, it was a three-fold economic impact in addition to
assuring that NANA maintained strong oversight for marine mammal
protection and the environment.
MS. MATHIAS moved to slide 14 and discussed local and state
government revenue. She said local governments received $34
million [in 2018]. The two largest taxpayers within the City
and Borough of Juneau are from the mining industry, she noted,
and the largest taxpayer in Fairbanks and in Northwest Arctic
Borough is also the mining industry. Mining is very important
to other regions, she continued, such as Nome, Healy, and Delta
Junction. She pointed out that $103 million went to state
government [in 2018], as well as $46 million in other state
government-related revenue.
2:47:30 PM
MS. MATHIAS addressed slide 15 depicting a graph of the five-
year average of state revenue versus state costs for mining from
a 2016 study by the University of Alaska's Institute of Social
and Economic Research. She said it is important to consider the
net benefit of mining to the State of Alaska. She pointed out
that the annual average of state and local revenue was over $100
million, while the state's annual operational and capital costs
were much lower [about $10 million]. One reason for the large
net benefit to the state, she continued, is that the state is
able to bill its permitting, monitoring, and oversight costs to
the mining companies.
MS. MATHIAS displayed slide 16 and noted that land ownership
really matters when it comes to revenue. The state only gets a
royalty payment if the mine is on state land, she explained.
For example, she said, Red Dog Mine is on NANA land, so NANA
gets the royalty. However, she continued, all of the mines pay
the Alaska Mining License Tax and also the [Corporation] Net
Income Tax.
MS. MATHIAS turned to slide 17 and outlined sources of the $148
million in state revenue in 2018. She said the Alaska Mining
License Tax, rent, and royalties [provided $58.8 million]. The
Corporation Net Income Tax [provided $34.6 million], she
continued, and the Alaska Industrial Development and Export
Authority (AIDEA) received [$28.2 million] for use of the
Skagway ore terminal and the Red Dog port and road system.
2:47:07 PM
REPRESENTATIVE HANNAN noted the Red Dog Mine is entirely on
Native corporation land. She asked whether the other producing
mines are on Native or state lands.
MS. MATHIAS responded by flipping ahead to slide 20. She stated
that the five largest producing mines are metal mines and that
Usibelli Coal Mine is the sixth largest mine in the state. Pogo
and Usibelli, she said, operate exclusively on state land and
the royalties go directly to the state. Only a portion of the
Fort Knox and Kensington mines, she continued, are on state
land. There are other mines that are not operating on state
land at all, she added.
MS. MATHIAS turned to slide 18 and resumed her presentation.
Regarding the Alaska Mining License Tax, she said there were
years of declining commodity prices, declining exploration and
spending, and declining job numbers, while the only thing that
seemed to be increasing was operational cost. All of this, she
continued, was reflected in the revenue the state received.
This turned around in 2016, she stated, and the jump in revenue
was because things had improved.
MS. MATHIAS moved to slide 19 and said it is important to look
at a bigger picture than just the Alaska Mining License Tax.
She explained that from a company's standpoint a tax is a tax -
it doesn't matter whether the company is paying one type of
state tax or a federal tax - it all is a cost of doing business
and so a company looks at it in aggregate. She pointed out that
a mine on state land is paying federal corporate tax, state
corporate tax, the Alaska Mining License Tax, and a royalty.
Five of the six producing mines are in organized boroughs, she
continued, and are also paying a local property tax or a payment
in lieu of taxes (PILT), plus local taxes on local procurements.
2:50:35 PM
MS. MATHIAS displayed slide 21 and said it isn't just about
revenue to state government - mining pays its way. She noted
that to bring a mine into production the mining companies pay
their exploration, development, and construction costs, which
can be hundreds of millions, maybe even billions, of dollars for
the large mines using modern technology. She pointed out that
mining is more expensive in Alaska than in other states because
Alaska lacks infrastructure. In addition to setting up the mine
operation and the mill, she continued, a mine may be looking at
paying the costs of building a power source, a road, or a port.
Plus, she added, every mine must put up a bond for reclamation
and closure.
MS. MATHIAS turned to slide 22 and pointed out that mines must
pay Reimbursable Service Agreements, which is the amount that
the state bills back to the companies for the state's permitting
and oversight costs. She reported that between the years 2012
and 2017 this amount fluctuated between $1 million and $2.6
million. This fluctuation, she explained, is because when a
large mine starts permitting there is a real increase in
permitting cost.
MS. MATHIAS spoke to AIDEA's return on investment as outlined on
slide 23. She noted there are a couple exceptions to mines
having to pay their infrastructure costs, one being the [$265
million] investment that AIDEA made into the Red Dog port and
road. She explained that AIDEA has a dual mandate it must
make wise investments that make money for the State of Alaska
and it must make investments that will increase economic growth
in the state. She said the Red Dog port and road have been an
absolute success for AIDEA in regard to these mandates. She
specified that for an initial investment of $265 million, AIDEA
has received $465 million [as of 12/2017] and the contract goes
to 2040.
MS. MATHIAS moved to slide 24 depicting a graph of exploration
spending for the years 2011 to 2018. She opined that the
"Fraser report" is a survey and is the perception of individual
mining executives giving their personal view and experience. It
is more important to actually look at where they spend their
money, she continued. She related that the four years from 2011
to 2016 saw an incredible decline in exploration spending in
Alaska, as well as globally. Commodity prices tanked, she said,
companies had to write down a number of acquisitions, and it was
almost impossible to raise money for mining exploration because
investors were very cautious. That has started to turn around
over the last couple years, she continued; commodity prices are
improving and there is a bit more ease in raising money on the
stock exchanges. While this upward trend is far from what it
was, she added, it is going in the right direction and the
expectation for Alaska is that 2019 will be as good as 2018 or
potentially better.
2:58:23 PM
S. MATHIAS displayed slide 25 and discussed how to ensure the
increase of [exploration]. She said modern economies around the
world need minerals. While Alaska has world class deposits, she
continued, it must compete for global investment with all of the
other mining jurisdictions in the world. Alaska competes by
having an attractive investment climate, she added. Alaska has
specific challenges, such as the lack of infrastructure,
climate, distance from markets, she noted, but what can be
controlled is the perception that Alaska is a good place to do
business. If Alaska doesn't send that message, she warned, then
the limited capital can go to other jurisdictions. Policies
that show fiscal certainty and regulatory certainty help
investors make that decision, she said. Ultimately, she
continued, that means more money in Alaska, more jobs, more
opportunities for Native corporations through revenue sharing,
more local procurement, and more revenue for state and local
governments. Many Alaska communities and thousands of Alaskan
miners and their families depend on a healthy mining industry.
MS. MATHIAS discussed a slide not included in her prepared
presentation. She said the slide is for an electronic fund that
includes multiple commodities and depicts information up to the
year 2017. Because the fund invests in many mining stocks, she
noted, it provides a sense of how volatile commodity prices are
and what is happening in the industry. She explained that the
huge dip on the far left side of the slide is the 2008 financial
crisis. She drew attention to the steady decline from the high
in 2011 until 2016 and said one reason the Alaska [Mining]
License Tax was so low in 2016 was a result of four years of
decline.
MS. MATHIAS related that a recent report from the Alaska
Department of Labor and Workforce Development says 62 percent
local hire. She said it doesn't include contractors and some
self-employed, including many of the 1,100 placer miners, and
therefore the numbers in the McDowell Group study tend to be
higher. However, she continued, in places where it is easy to
get to work, like Fort Knox, 100 percent of the employees are
Alaskans living in the Fairbanks North Star Borough. [At the
Red Dog Mine] 55 percent of the more than 600 jobs are NANA
shareholders and [the mine's] overall Alaska hire is 75 percent.
The industry wants to hire Alaskans, she opined, because
Alaskans already know what it's like to live in Alaska and are
more likely to stay and make good employees. She said the
industry has tried to encourage that by supporting scholarships
and training programs. Through the Educational Tax Credit, $20
million was invested into vocational programs at high schools
and the University of Alaska to support programs that train
Alaskans to be the next generation of miners in Alaska.
3:02:21 PM
REPRESENTATIVE RAUSCHER pointed out that, while the Northern
Star Pogo Mine may not be paying local taxes, the mine does have
some nice contracts with the community in Delta Junction and it
supports that community and area very well. He noted he is the
representative for that district.
CO-CHAIR TARR commented that the lack of infrastructure might
not be unique to Alaska. She recognized that Ms. Mathias is
Canadian and asked whether other big geographic areas have
better solutions for that.
MS. MATHIAS replied that a comparison was done of a mine in
northern Ontario that went into production a few years ago, the
mine being roughly the same size as Donlin in the amount of
throughput and how much would be milled each day. She offered
her belief that the capital investment was just over $1 billion
Canadian while Donlin is looking at $6-$7 billion. She said the
mining jurisdictions in Canada have found ways, even in remote
areas, to incentivize mining, whether it is through more
public/private partnerships in infrastructure and electrical
transmission investment, or other ways such as tax incentives.
MS. CROCKETT, responding to Representative Talerico, reiterated
that Usibelli Coal Mine provides 39 percent of Interior Alaska's
electricity.
CO-CHAIR TARR reminded the presenters that they had agreed to
get back to the committee regarding a state comparison for
required permits.
3:05:07 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 3:05 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HRES Department of Revenue _Mining Presentation to Legislature 4.8.2019.pdf |
HRES 4/8/2019 1:00:00 PM |
Mining Taxes |
| HRES Mining Industry Update 4.8.19.pdf |
HRES 4/8/2019 1:00:00 PM |
Mining |