August 2008 General Accounting Office Report on Mining Royalties

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GAO Report on royalties August 2008


Subject: Hardrock Mining: Information on State Royalties and Trends in Mineral Imports and Exports

Since the passage of the General Mining Act of 1872, miners have extracted billions of dollars worth of gold, silver, copper, and other hardrock (locatable) minerals from federal lands without having to pay a royalty.1 Congress is now considering amending the General Mining Act to, among other things, assess a royalty to ensure that the public is compensated for hardrock minerals extracted from federal lands, as more recently enacted laws require for oil, gas, and other minerals. The vast majority of the federal lands where hardrock mining operations occur are in 12 western states, including Alaska (hereafter referred to as the 12 western states).2,3

These western states have statutes governing hardrock mining operations on lands in their state. However, unlike the federal government, these states charge royalties that allow them to share in the proceeds from hardrock minerals extracted from state-owned

Under U.S. mining laws, minerals are classified as locatable, leasable, or saleable. Locatable minerals include those minerals that are not leasable or saleable, for example, copper, lead, zinc, magnesium, gold, silver, and uranium. Only locatable minerals continue to be “claimed” under the Mining Act. For the purposes of this report, we use the term “hardrock minerals” as a synonym for “locatable minerals.” Leasable minerals include, for example, oil, gas, and coal. The Mineral Leasing Act of 1920, 41 Stat. 437 (codified at 30 U.S.C. § 181) created a leasing system for coal, gas, oil and other fuels, and chemical minerals. Saleable minerals include, for example, common sand, stone, and gravel. In 1955, the Multiple Use Mining Act of 1955, 69 Stat. 367 (codified at 30 U.S.C. § 601) removed common varieties of sand, stone, and gravel from development under the Mining Act.

Mining operations consist of three primary stages—exploration, mining, and mineral processing. 3The 11 other western states are Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming…