Mining Oversight and Accountability Commission meeting

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1. 

   Elko says Pass SJR15

   7:10 am on March 27, 2013

   Unfortunately, Elko citizens are at a disadvantage when it comes to supporting, or opposing this isssue, and many are unable to make the NMOAC hearing. However, in Elko, we want to see SJR 15 passed so the people of Nevada can vote, not for a new tax on the mining industry (which Sandoval opposes), but to remove the protections that the Mining Industry, primarily the Out-of-State Mining Corporations, have abused for decades. http://www.planaction.org/wp-content/uploads/Final-Mining-Report-June-2012.pdf

   We have seen the Out-of-State mining corporations hold Elko County, and our elected politicians, hostage (Newmont and Barrick are the largest donors to Pete’s and John’s campaign http://www.followthemoney.org/database/StateGlance/contributor.phtml?d=1385938297.

   When bad decisions are made in Colorado, or in Canada, people in Elko feel the negative impacts of those decisions, in the form of labor market manipulation, mass layoffs (such as Jerritt Canyon’s mass layoffs in violation of the WARN Act http://elkodaily.com/news/local/ex-jerritt-workers-want-money/article_28eb5944-4e50-11e0-95cf-001cc4c03286.html, and Newmont’s recent wave of layoffs http://www.mynews4.com/mostpopular/story/Series-of-layoffs-to-come-at-Newmont-Gold-in-Elko/aVSGwBcTO0qUWiecV3e1bQ.cspx) or through other means, such as hiring freezes or directed charitable contributions to Pro-Mining charities.

   The poor business decisions, made by out-of-state managers, have a far reaching consequence to the employees in Nevada. for instance, despite knowing Newmont was highly likely to take a loss on their Hope Bay failure, they nonetheless held a party in Elko to celebrate the decision to partner with Orange County Choppers for a Gold-plated “recruitment” motorcycle ( http://www.youtube.com/watch?v=vQpZt-17Fwo )…yet only a few months later, Newmont initiated a series of layoffs that would leave their employees in Nevada, jobless, and their office in elko occupied with a motorcycle ( http://www.mynews4.com/mostpopular/story/Series-of-layoffs-to-come-at-Newmont-Gold-in-Elko/aVSGwBcTO0qUWiecV3e1bQ.cspx ).

   These poor management decisions cost NV employees their jobs! So ask Jim if Newmont still has the Bike, and why Newmont’s out-of-state managers chose to keep the Motorcycle over their employees in Nevada? Was it due to Lack of a talented workforce?

   If so, placing NV’s budget deficit on the backs of students through increased tuition costs does not encourage “would-be” miners to attend college in Nevada!

   Even more offensive is the fact that the Legislature in the last session was informed that the Mining Industry was not being audited. Yet, Newmont and Barrick failed to disclose this to investors, in violation of the Federal Securities and Exchange Laws. Later, the Nevada Department of Taxation discovered, following an audit, that 3 mines had taken over $8.7 Million in illegal tax deductions, and that the results of their audit on Newmont was, and currently appears to still is pending. http://www.lasvegassun.com/news/2012/jul/04/audits-find-mining-companies-underpaid-87/

   People in Elko want to know the results of this audit. We believe it is crucial that Christopher Nielsen with Nevada’s Department of Tax, and the NV Attorney General, are involved in this discussion. http://articles.businessinsider.com/2011-04-17/news/29957808_1_nevada-mines-deductions-crowley .

   WHAT IS THE STATUS OF NEWMONT’S AUDIT, and WHY DID NEWMONT, and BARRICK, NOT INFORM THE INDEPENDENT AUDITORS, or the Nevada Department of Taxation THAT THEY WERE NOT BEING AUDITED by the State, PRIOR TO THE LEGISLATURE FINDING OUT LAST LEGISLATIVE SESSION? (Even PricewaterhouseCoopers LLP failed to disclose the non-audit in their “independent” audit of Newmont’s 10-k and 10-Q’s that Newmont’s management is supposed to provide to investors)?

   This failure to disclose may be because the mines make so much money, that the rate of tax that Newmont or Barrick would pay does not meet the Minimum Threshold for being considered a “material misstatement” for that year. However, in the aggregate, over the course of several years, these “misstatements” amount to a significant amount for Nevada.

   WERE THE MINES TRYING TO AVOID BEING AUDITED? WHY? WHY HAS THE ATTORNEY GENERAL BEEN SILENT ON THE ILLEGAL DEDUCTIONS?

   THESE OUT-OF-STATE CORPORATIONS CLAIM THEY OPERATE WITH A SOCIAL LICENSE – A PROMISE TO THE COMMUNITIES THAT THEY WILL BEHAVE ETHICALLY, AND WITHIN THE PURVIEW OF NEVADA’S LAWS. NEWMONT HAS IN-HOUSE COUNSEL (RICHARD MATHEWS), AND BOTH NEWMONT and BARRICK CLEARLY HAVE THE RESOURCES TO SEEK ADVICE, SO THERE IS NO EXCUSE FOR THEIR BEHAVIOR IN AVOIDING THE AUDITORS.

   Prior to the audits, Pete Goicoechea went on record defending his campaign contributors, stating that “the field audits probably won’t find that the mining companies did anything illegal because the companies have ‘the best audit teams in the world.’” However, A FEW MONTHS LATER, as we have seen, the audits could only go back 3 years. Nonetheless, the field audits turned up $Millions.

   Apparently, the Nevada Department of Taxation apparently hasn’t finished the audit on Newmont, which has been going on for more than a year! http://elkodaily.com/news/local/article_477ddc7e-5558-11e0-961c-001cc4c03286.html http://www.lasvegassun.com/news/2012/jul/04/audits-find-mining-companies-underpaid-87/ WHY IS THIS AUDIT TAKING SO LONG?

   These Out-of-State Corporations basically control the economic prosperity of other businesses in Elko, due to the lack of economic diversity, WHICH ALSO PUTS THEM IN A POSITION TO MANIPULATE THE LABOR MARKET. They are not helping, neither are the lack of laws that allow the mines to participate in mass layoffs in violation of the WARN Act, and labor market manipulation (terminating employees with good jobs, forcing them to work at partnering mines for less compensation, as was the case with the Jerritt Canyon layoffs – no advanced notice, no payment to employees, and some employees were forced to work for less compensation at the other mines, driving labor costs down! The mines are not hiring, and recall the report that the NMA put out whcih shows that mining had decreased in 2009, from 14,470 in 2007 to 11,609 n 2007. See page 8 of the Economic Overview. http://www.nevadamining.org/issues_policy/pdfs/NVMA_2009_Economic_Overview.pdf

   Furthermore, while Pete, John, Jim, and Tim will surely argue that the mines donate money, their donations are minuscule compared to the tax revenue that they would have to contribute if taxed as a gross proceeds amount, and/or not been allowed to take illegal tax deductions, and they would no longer have the only say who the donations go to. These protections take the power of distribution out of the control of our elected officials, and place it in Newmont’s managers’ hands…this is a red flag for an area of potential fraud, and at a minimum, an area of concern!

   And, despite the mining industry taking $Billions of Non-renewable resources out of the County, and out of the State, so they can make $Billions in profit, Elko is plagued with increasing crimes (due in part to lack of funding for law enforcement, and an increasing transient or temporary population), and decreasing public education standings (Nevada ranks in the bottom in terms of Public Education), due to the lack of tax revenue under the industry’s current protections. http://elkodaily.com/city-council-special-meeting-violence-downtown-elko-part/youtube_02b40390-8b46-11e2-a5bf-001a4bcf887a.html

   The mining industry pays a measly 1% in taxes, and prior to 2011, back to 2000, the average was 0.66% – less than 3/4 of a percent! http://www.planaction.org/wp-content/uploads/Final-Mining-Report-June-2012.pdf

   Gaming and Sales Tax revenue make up 54%-57% of Nevada’s Budget, and according to the Elko Daily Free Press, Gaming revenues are down 12.5%, and ~20% even in Elko. http://elkodaily.com/news/state-and-regional/gambling-revenue-down-percent-elko-s-win-down-percent/article_2eda3a1e-8873-11e2-9fa0-001a4bcf887a.html

   Nevada needs to diversify its Revenue portfolio to hedge against times like this (when sales and gaming revenues are down, but gold prices are at historical highs), but without getting these protections out of the Nevada Constitution, Nevada is unable to diversify its revenue streams, and moreover, Nevada has to sit back and watch primarily 2 dominating Out-of-State Corporations send their profits out of Nevada. By removing the protections afforded to the mining industry, Nevada is basically making them compete for profits with other businesses. while the mining industry will say that their business is risky, this is very far from the truth, as there are several levels of management that risky capital projects must go through. These projects only pass through the managers if there is a strong business case presented…they are not just going out on public land and guessing a few rocks might have $0.25 cents worth of gold in it. Again, the risks are minimized when ideas are presented to the Capital Expenditure Committees, which require a strong business case, and several levels of managerial approval, as a capital project moves through a stage-gate process, and then it may even go through Board Approval: http://www.newmont.com/our-investors/press-releases/2011/03242011

   The mining industry’s argument that costs are increasing is primarily due to the failure of their managers to negotiate more favorable prices. Nonetheless, the poor decisions being made by Out-of-State managers cost Nevada employees jobs, veiled as increasing costs, rather than poor managerial decisions. http://www.mynews4.com/mostpopular/story/Series-of-layoffs-to-come-at-Newmont-Gold-in-Elko/aVSGwBcTO0qUWiecV3e1bQ.cspx

   Consequently, if Newmont or Barrick have a hard time with a project in Peru, or in Africa, they can help maintain their overall Gross Profit Margin by laying off employees in Nevada. Nevada employees, and mining-related businesses, and the communities of Elko, Eureka, Battle Mountain, and Winnemucca, are held hostage to the decisions that are being made by Out-of-State managers overlooking global operations, not a Mom and Pop mine of the late 1800′s.

   Again, we know that Passing SJR 15 does not create a new tax on the mining industry, but it rather allows the people of Nevada to vote if they want these constitutional protections out of the NV Constitution so the mining industry can compete along with other businesses for profits, and for talent, who have had to deal without the protections the mining industry is afforded – the taxes are not new taxes, but rather it would create new players in an already existing tax structure that other businesses in Nevada have to play by.

   Our representatives in Northern Nevada do not seem to understand that, so we are hoping the rest of the State’s officials do understand it, and can help us, and the rest of the State’s citizens, so that we have a voice regarding Nevada’s Non-renewable resources.

   Our Children’s future, and other people and businesses in Nevada, depend on these protections being removed. SJR15 does not single out the mining industry, but rather it removes the handicap that they have been using to calculate their scorecard…so that the two Out-of-State Corporations can compete with the rest of the businesses in the profit game. While Goicoechea, Ellison, and others who received significant campaign contributions from the out-of-state corporate mines, will surely be voting against passing SJR 15, residents in Elko who are no longer being represented by their elected officials, are hoping you can be the voice of Elko’s voters and encourage other elected officials to Pass SJR 15.

   Thanks for your voice, and for your help.

   Elko County Citizens for SJR 15.

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