Editorial: US House tightens noose around American miners necks

The past week has seen growing momentum in the U.S. House of Representatives for the passage of the pernicious Hardrock Mining and Reclamation Act of 2007 (H.R. 2262), an overhaul spearheaded by Nick Rayhall (D-W.Va.) of the Mining Act of 1872.

This act, if it becomes law, will be devastating for the U.S. mining sector, as it would pretty much shut off new mine investment on federal land, which accounts for up to 86% of land in some Western States, and bleed white existing operations with heavy taxes and suffocating regulations.

Not only would it shift mining investment and high-paying, small-town jobs out of the U.S., it would threaten national security by making the U.S. that much more dependent on potentially hostile foreigners for its strategic minerals.

There are many, many problems with the act, which is stuffed with rehashed anti-mining ideas first concocted under the Clinton administration, but what stands out is a new tax that would impose the worlds highest mining royalty rates: an 8% gross royalty on new mines built on federal land, plus a similar, retroactive 4% levy on existing mines on federal land.

This 8% royalty would shelve most new mine development in the U.S., as few deposits could jump this economic hurdle.

Other deep flaws in the act include: a mechanism for political appointees to veto permitted projects on a whim; the death of the patent system and the introduction of mining permits that only last 10 years; the introduction of a myriad of redundant new environmental regulations; and the withdrawal of vast amounts of federal land from mineral exploration and mining.

At presstime, the bill looks set to pass in the House on Halloween with good support from the Democrats. That means the battleground will shift to the Senate floor early in the New Year.

With the bill needing 60 or more votes to pass in the Senate, there is a much better opportunity here of stopping the madness.

If the act is approved by the Senate, then the last hope is a veto by President Bush. The White House has come out strongly against the bill, but the president has rarely used his veto power.

On the plus side, the U.S. mining industry is unified like never before, and has shown its ready to compromise and accept more reasonable royalties, particularly ones based on profits rather than gross, and thus able to withstand the inevitable ups and down of a cyclical industry.

If you have any stake in U.S. mining, nows the time to throw your full support behind the National Mining Association and the Northwest Mining Association, both of whom are lobbying hard on your behalf to defeat this act.