STATE'S REVENUES FROM MINING INDUSTRY

RISE SHARPLY

An analysis by the Alaska Department of Commerce and Economic Development shows state revenues from mining increasing sharply from recent years, mostly due to high commodity prices.  Revenues have risen from $8 million in 2003 to $45 million in 2006.  In 2004, the state took in $15.5 million and in 2005 it collected $26.2 million.

The state revenues include mining rents and royalties, the mining license tax (which is similar to the production tax on oil), as well as miscellaneous fees.  The numbers do not include payments to the state-owned Alaska Railroad Corporation for shipments coal from the Usibelli coal Mine near Healy, or to the Alaska Industrial Development and Export Authority for TeckCominco’s use of the stateowned Red Dog road and port.  They also do not include local property taxes.

During 2006, the state spent $13 million regulating and promoting the industry, leaving a net profit for the state of $32 million.  This places the mining industry in second place behind oil in net revenues to the state from natural resources industries, including fishing, tourism and timber.

The report noted that while mining will never compare in magnitude to the oil industry in generating revenues to the state, it provides significant private sector opportunity to both rural and urban areas of Alaska.  The report concluded the industry “pays its fair share in taxes compared to other non-oil industries” and that stable taxes are needed for the industry to survive the volatile swings in commodity prices.

It also said stable fiscal and regulatory policy is needed to attract the long-term capital required to reach the industry’s potential in Alaska.

In 2006, the industry spent more than $500 million in exploration and development.  Industry payroll was approximately $280 million with an average annual wage of $71,000.  There were 2,900 direct mining jobs in Alaska.  Total jobs attributed to the industry grew to 5,100.