Oct 20, 2020
Q-and-A: NVMA president talks turbulent year for mining industry
7 MIN READ
News | October 12, 2020
RENO, Nev. — When Tyre Gray stepped in as president of the Nevada Mining Association in mid-February, he immediately began making plans to tour a handful of the 99 mines dotting the Silver State.
A month later, after the coronavirus pandemic shut down the state, Gray realized he wouldn’t be seeing Nevada’s mining operations anytime soon.
“Right off the bat, I had planned on touring with some of my major members,” Gray said. “And, unfortunately, I wasn’t able to do so because of COVID protocols and quarantining.
“It has been a crazy first year, to say the least.”
With that in mind, the NNBW recently sat down with Gray, now working in NVMA’s office in downtown Reno, to dig into a wide range of topics related to Nevada’s mining industry — from challenges and innovations brought on by COVID to workforce development to potential changes to the state’s mining taxes.
Q: How has the pandemic impacted Nevada’s mining industry?
Gray: Frankly, the great thing about the mining industry is we are somewhat isolated in that the majority of our operations are in rural Nevada. So that cut down some of the daily contacts that you would expect from some of the urban areas. But with that, we’re part of a global community and global supply chain. The industry was able to call upon experiences it had in the past. Many of our operators have people who were trained on Ebola virus protocols, even before this came up. Again, being part of a global supply chain, having people who have moved around or operated in Africa, we had people here who were already trained in those procedures. Back in late February, when the virus started really becoming known, our operators were already putting into place protocols way before the governor even had a mandate. That ability to call on that experience helped us to pivot quickly and be in a position where we could continue to operate throughout the pandemic.
It also drove a lot of innovation. One of the great things about this industry is when there’s a need they build it. In the underground, you take an elevator or lift down, and because of the new protocols, an elevator that would normally take down 20 people could only take down three-to-five (people). So what they did is create, with Plexiglas, where everybody had their own little cave, if you will, and it was really cool to see. It was a sign of ingenuity, of being able to innovate and create around an issue.
There have been challenges. There have been reductions in production. From an industry perspective, we’ve seen production reduce anywhere between 20-25%. That’s fairly substantial. We would never complain about that because some of our businesses have seen their production reduce by 100%. We bus our folks out, and a bus that would normally take 50 people can only take 15 people, so you need three-to-four buses instead of just one, which means increased costs. But at the end of the day we have a culture of health and safety, and our employees are our No. 1 asset. There’s not a single mine site that you will walk on that doesn’t have a sign that says, “the goal is everybody goes home,” or something like that.
We’re happy to be able to keep operating in order to generate revenue, not only for our employees but for the state. The state does rely heavily on some of the mining dollars that come in taxes, so as long as we’re able to continue to produce, we’re able to meet our tax obligations, which then helps to defray some of the cuts that our Legislature has had to make.
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.
Q: Going back to innovation. What are some of the latest trends happening in mining technology?
Gray: One of the things that we as an industry have been doing is working with the nature conservatory about the ability to use old mine sites as solar panel gardens. We’re in the infancy of this project. That would be really, really exciting. Not only would it create an alternative use for an old mine site but it would really help to build toward the green future. Mining and green technology are linked. A lot of people don’t think about it that way, because, unfortunately, people think of that old-school mining standpoint. An oversimplification is: if it’s not grown, it’s mined. A lot of the modern technologies that we use wouldn’t be here but for mining. Making sure that mining is done in a responsible, sustainable and environmentally friendly way is what we’re after, and that’s really where all of our members are committed. I think our reclamation is really proof of that. We have reclamation regulations that lead the world.
One of the cool things at the mine sites when the pit is open, is they use a lot of technology to scan the actual mine to look for weaknesses or any potential movement and things like that. That’s really hearkened back to our No. 1 culture bullet, which is our health and safety. The last thing is our autonomous capabilities. A lot of people don’t think about the ability to have autonomous mining vehicles. When I say autonomous, I mean more from the perspective of not necessarily needing to be in the cabin. So there are mines all across the world and country that are testing out vehicles that can be driven remotely. That’s where technology is headed. And we’re excited to see what 5G brings — 5G really does create new innovations like 4G did, and we’ll what happens around that.
Q: Lastly, what is your vision as president of the Nevada Mining Association?
Gray: We just went through our strategic plan. And when we went through our plan, we looked at workforce development, association excellence, legislative … but for me, workforce development and community engagement are the two big ones. People need and people want jobs. When we look at how we had to slow down our economy, it’s heartbreaking to have people go from having employment to not having employment; having to rely on government assistance to now being in a position where they’re crossing their fingers to hopefully get employment back. If we can find ways to create more jobs in our industry, we want that. The mining industry, historically, runs about 400 jobs below where it should be. One of the things that we’ve been doing is working with local workforce development partners. We’ve been looking to these entities and nonprofits and saying “we have jobs, how can we get people into these jobs?”
And we want to create diversity in our workforce. I think we, as an industry, work really hard to create diversity within our gender population. We’re still not where we want to be. And so now we’re looking at how do we create more culture diversity within our fields? That means looking into different communities, and I think that’s where some of our community partners are going to help us out. Nevada has grown by over a million people in the last 20 years. We are consistently ranked one of the top-growing states. With that comes a lot of people who may not be familiar with mining. And I think we have a huge opportunity, and the association has the responsibility, to go out and educate folks of what mining is. We’re not the 1880s cartoon version — a guy walking around with the nice beard and pickax and sticks of dynamite.
We really are a very technologically advanced industry. In fact, the methods that we use for extraction today are methods that were developed in the 1980s and are highly scientific, using cyanide and other chemicals in order to extract. We have the ability to use those chemicals and make sure those chemicals are contained, isolated, and not made into harmful materials by the time we finish the process. We’re nothing if we go out and we just pollute and do whatever and walk away. That doesn’t happen today. We’re making sure we’re educating the community about who we are, what we do, and our desires to be better than we were in the past and continue to improve.
Editor’s note: This interview was edited and condensed for clarity.