December 31, 2007
Gold production reigns in Nevada, and the state’s two leading mining companies Newmont Mining Co. and Barrick Gold remain bullish on its production in the coming year.
“We really believe there is going to be a rise in the price of gold and that it is going to stay strong,” says Mary Korpi, director of external relations for Newmont.
Ditto for Barrick Gold, the world’s largest producer.
“We believe that high gold prices will continue,” says Lou Schack, manager of communications and community affairs for Barrick’s North America operations. “A strong gold market creates opportunities for steady production over the long term, and it allows us to continue to support the many communities we have a presence in Nevada.”
Gold broke $800 an ounce in 2007, its highest price since the late 1980s. Schack says Nevada mines account for the bulk of Barrick’s North American gold production, and that the company is moving forward with several new projects.
“Nevada remains a major focus for us and will for many years,” he says.
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Barrick hopes to receive permitting for three projects: the Cortez Hills mine at Cortez in the Crescent Valley of Lander County, expansion for its Goldstrike open pit mine at Round Mountain in Nye County and expansion for the Bald Mountain Mine in White Pine County.
“Those three projects will sustain production jobs and all the other benefits that come with it for many years,” Schack says. “The success of those three mines is critical to the company.”
Although commodities prices are expected to remain in record territory in 2008, mining companies will continue to feel the pinch of rising energy costs, northern Nevada mining experts say.
And labor remains a challenge as the industry booms.
Another major problem stemming from the increase in mining production: Extended permitting time for exploration and bringing new projects online. Short-staffed government regulatory agencies are being bombarded with paperwork, which lengthens the process.
“There have been efforts by companies large and small to find new resources that will be the mines of tomorrow,” says Russ Fields, recently retired president of the Nevada Mining Association. “It will be interesting to see how the permitting process goes on the more advanced projects. It’s very important in keeping Nevada’s competitive edge that these projects get through the development stage and into production.”
Fields notes that the Bureau of Land Management oversees much of the land under consideration for new projects, further lengthening permitting processes.
One way large mining companies are combating escalating energy costs is to supply their own. Newmont Mining Company’s 200 Megawatt TS Power Plant at Dunphy between Battle Mountain and Carlin cost $650 million to build and is expected to come online midyear, Korpi says.
Fields says energy costs are second only to human resources in mining operations, and that escalating costs for diesel fuel have led many to buy forward, or to purchase fuel at a set price for a given time frame to reduce price volatility.
“There are some operating methods that you can employ that maximize fuel, but not a lot can be done. They burn what they burn. It is a big factor,” he says.
Mining companies continue to suffer from a lack of skilled personnel to operate mining equipment, as well as engineers, geologists and environmental scientists. Newmont partnered with Great Basin College for skills training and has been able to provide employees in the electrical fields and diesel mechanics.
At its Turquoise Ridge site in Humboldt County, Barrick took a more direct approach by hiring greenhorn miners and placing them in an in-house, hands-on mining academy. Schack says the program has been very successful. “They learn pretty quick whether or not they are cut out for it.”
With more than 3,000 employees worldwide, Barrick must hire hundreds of new miners each year just to stay up with turnover levels, not to mention adding to an already-strained workforce.
“We need a steady flow of people,” Schack says.
Proposed legislation could greatly affect new projects as well.
The Hardrock and Mining Act of 2007 passed by the U.S. House and pending before the Senate proposes an 8 percent federal royalty on all new projects.
In its current form, the bill could have “enormous impact” on Nevada, Korpi says.
“We believe that some changes are needed to mining law, but it has got to be reasonable and responsible, that benefits the government, the communities, and still be beneficial to the mining companies,” the Newmont executive says.