It looks like Congress might decrease mine supplies even further...

Regards - VHF

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BEST OF MICHAEL BERRY

March 25, 2009

The new Mining Law

I encourage each of you to write to your Congressmen and Congresswomen to protest the passage of Bill HR699 (The Hard Rock Mining and Reclamation Act of 2009) now in Congress. Congressman Nick Rahall of West Virginia is the lead on this bill. This bill will damage all mining in the United States much in the same way carbon cap and trade will damage the country. It is punitive and will increase our dependence on foreign sources of supply. Miners will simply pack up and go elsewhere – perhaps where environmental controls are not as restrictive.

I am trying to reason in my own very finite mind why we are taking this path. I understand the need to preserve the nation’s parks. I understand the move to preserve the environment. I also believe that industries should be fairly taxed. However both the energy and hard rock mining sectors produce significant wealth in this country. They also supply significant jobs. This is a consideration not entirely unimportant with a U-6 unemployment rate of 14.8% and increasing each month.

We are about to embark on a significant infrastructure buildout in the US. This is not the high speed rail line from Disneyland to Las Vegas recently proposed as "shovel ready" in the Obama budget, but a new electrical grid. It is badly needed and will become a significant resource of the country. The auto industry is in dire straits. We shall soon see whether it is put into bankruptcy or allowed to linger among the living dead. Cars need copper, aluminum, molybdenum and silver among other metals. Batteries need lithium … you know the story. If we restrict mining with a punitive bill we will lose jobs expertise and we will destroy the wealth we might have created at home. That wealth will be exported elsewhere much as our prolifigate energy uses and failed policies for the past 50 years have exported our wealth to the OPEC’s of the world. For the new electrical grid or the fusion reactors Mr. Friedman dreams about where will the copper and exotic metals be sourced?

The big copper porphyries of Arizona and Utah will be taxed and this will retard, delay or worse, destroy production potential. Obviously employment of some 500,000 workers will be impacted more quickly than this chart from 5/25/08 shows.

Nevada’s Senator Reid had better hope his Disneyland high speed rail link works.

In our Discovery Investing quest we will have no choice but to shift our focus north to Canada. Ontario, Quebec and British Columbia offer significant opportunities for hard rock mining even though many of these commodities are now depressed. Quebec is especially attractive for its tax system. Saskatchewan is the new star in Canada. Saskatchewan boasts potash, uranium, gold, lignite coal, farmland and oil sands and a will to move forward. I will be conducting a seminar in Saskatoon in early May. Canadian Discovery names as well as commodities will stand to benefit from such a punitive US mining bill if it passes into law. much as the OPEC nations have benefited from our failed energy policies.

Here is a synopsis of the energy bill. Please read it and call your Congressman to suggest the alternative. One question as mentioned in the Bill. If I become a complainant and wish to remain anonymous do I get to wear a black hood during the inspection of the property by the Secretary? All in jest of course!

• Casual use would be redefined to allow only those activities that do not cause "any disturbance of public lands and resources." The collection of samples, use of gold pans and non-motorized sluices would be the only activities allowed without a Notice or Plan. Taking a vehicle off-road would also require a Notice or Plan. Any extraction of minerals for sale or use would require a Notice or Plan.
• H.R. 699 would be retroactive. Existing mining that is not already operating under a Notice of Plan would require proof of a valuable discovery to retain a mining claim, and those operating under a Notice or Plan would have ten years to bring their operation under compliance with the new regulations.
• The patenting of mining claims, which has been suspended by yearly legislation since 1994, would be permanently discontinued.
• The federal government would be entitled to an 8 percent gross royalty for all locatable minerals for any new mining operation. Even if the miner is unable to make a reasonable profit at current commodity prices, he would have to give 8 percent to the federal government. Existing operations at the time the bill is passed would be subject to a 4 percent gross royalty, and any federal lands added to the operation after enactment of the bill would be subject to the 8 percent royalty.
• The reporting requirements are absurd. Anyone transporting a locatable mineral, concentrate or product derived from a locatable mineral shall carry documentation declaring the amount, origin and intended destination. Miners shall create and maintain reports relating to the quantity, quality, composition, volume, weight and assay value of all minerals extracted from a mining claim. Failure to produce these reports when requested by any officer or employee designated by the federal government may result in involuntary forfeiture of the mining claim.
• The federal government would be authorized to conduct audits of all claim holders, operators, transporters, purchasers, processors, or other persons directly or indirectly involved in the production or sales of locatable minerals.
• Mining claim maintenance fees would be raised to $150 per claim, and would be adjusted at least every five years based on the Consumer Price Index. The location fee would be increased to $50 per claim.
• Tens of millions of acres would be added to existing areas that are already off-limits to mining, including Wilderness Study Areas; areas of critical environmental concern; areas designated for inclusion in the National Wild and Scenic Rivers System; areas designated for potential addition, or eligible for inclusion; and any area identified in the set of inventoried roadless maps contained in the Forest Service Roadless Area Conservation Final Environmental Impact Statement, Volume 2, dated November 2000.
• Any State, political subdivision of a State, or Indian tribe could petition the Secretary of Interior to withdraw areas based on drinking water supplies, wildlife habitat, cultural or historic resources, scenic vistas or other similar values. Indian tribes could also petition for the withdrawal of areas for religious or cultural value.
• The bill would give the Secretary the authority to deny any operation that may cause undue degradation.
• To get an approved Plan, the operator would have to be able to show that no treatment of discharged water will be necessary 10 years after mine closure, and any Plan could be changed or halted if additional information about scientific, cultural or biological resources becomes available.
• The miner would have to submit an application to the federal government to request any cessation of operations greater than 180 days. A miner would have to obtain consent of the federal government to transfer ownership of any operation, and the transfer would require a fee to be paid to cover the government’s administrative costs.
• Financial assurance (bonding) would be required for any operation—presumably this would also apply to suction gold dredging—and the amount would be evaluated and adjusted every 3 years. Where water treatment is necessary, financial assurance funds would not be released until there is 5 full years where treatment is not necessary.
• States would be allowed to implement regulations that exceed the regulations in this bill.
• The federal government would be allowed to collect administrative fees to cover expenses incurred while regulating mining operations.
• Mining operations would be subjected to a minimum of one complete inspection per year.
• The bill would provide environmental lawyers an unending source of income. Any citizen would be allowed to file a civil lawsuit against the miner or the federal government to force compliance with the mining laws after giving sixty days written notice. The court would be allowed to award the costs of litigation, including attorney and witness fees, as the court deems appropriate.
• Any miner who fails to comply with any portion of a permit would be subjected to a fine of $25,000 per day.
• Any citizen who believes they are being adversely affected by a mining operation could request an inspection. If the Secretary agrees that an inspection is warranted, the complainant would be allowed to join in the inspection. Complainants could remain anonymous if desired.
• Any person who engages in mineral activities without the required permit, if convicted, would be punished by a fine of not less than $5,000 per day or by imprisonment for up to 3 years or both.
• Designated employees of the Department of Interior and Department of Agriculture would be given full law enforcement powers over permitted miners, including the power to subpoena miners to force attendance, testimony, and disclosure of all paperwork, and warrantless searches of vehicles and buildings expected to contain locatable minerals or products derived from them would be allowed.
• The Secretary would be forced to prevent mineral activities that could have an adverse impact on the resources and values of National Conservation System Units.

The legislation is co-sponsored by Reps. George Miller (D-CA), Henry Waxman (D-CA), Ed Markey (D-MA), Howard Berman (D-CA), Raúl Grijalva (D-AZ), Rush Holt (D-NJ), Jim Costa (D-CA), Donna Christensen (D-VI), Pete Stark (D-CA), Dale Kildee (D-MI), Maurice Hinchey (D-NY), Earl Blumenauer (D-OR), Patrick Kennedy (D-RI), Ron Kind (D-WI), Lois Capps (D-CA), Adam Schiff (D-CA), Mike Honda (D-CA), John Salazar (D-CO), Anna Eshoo (D-CA), Niki Tsongas (D-MA), and Gerry Connolly (D-VA).

The legislators who have sponsored this bill should be labeled as un-American, voted out of office, and sent packing for attempting to decimate one of the few industries that has managed to stay afloat and provide an honest paycheck during these tough economic times.

Please take a minute to contact your Representative and Senator to let them know your stance on H.R. 699. Better yet, why not start a recall effort if one of the bill’s sponsors is in your area, or stop by their local office for a bigger impact?