MINING THROUGH UNCERTAINTY The Importance of Minerals in Our Lives - PowerPoint PPT Presentation

Employment Growth by Sector Nevada | Prior Year vs. Present Manufacturing 12.6% Construction 11.3% Professional & Business Services 6.6% Financial Activities 4.0% Education & Health Services 3.7% Trade, Transportation & Utilities 2.1% Other Services 1.9% Leisure & Hospitality 1.6% Net Growth Rate: Government 0.9% +3.6% Mining & Logging 0.2% Information -0.8% Source: United States Bureau of Labor Statistics MINING THROUGH UNCERTAINTY 37

Mining Employees Next 12 Months Increase Stay About the Same Decrease 30.6% 38.8% 26.5% Refused/NA 4.1% Increase Stay About the Same Decrease Refused/NA Source: NvMA 2019 Survey MINING THROUGH UNCERTAINTY 38

Nevada Mining Employment Annual Employment Year-over-Year Growth 18,000 20% 16,000 15% 14,000 10% 12,000 5% 10,000 8,000 0% 6,000 -5% 4,000 -10% 2,000 0 -15% '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 YTD YTD Source: United States Bureau of Labor Statistics MINING THROUGH UNCERTAINTY 39

Mining Company Employment Growth Next 12 Months Increase Stay About the Same Refused/NA 46.9% 38.8% 10.2% Decrease 4.1% Increase Stay About the Same Decrease Refused/NA Source: NvMA 2019 Survey MINING THROUGH UNCERTAINTY 40

How Much Does the Mining Industry Pay in Taxes to Nevada? MINING THROUGH UNCERTAINTY 41

RANK TAXPAYER NAME TOTAL (IN MILLIONS) 1 MGM Resorts International $4,499 2 NV Energy (1,4) $2,425 3 Caesars Entertainment Corporation $2,223 Ten Highest 4 Wynn Resorts Limited $1,113 5 Las Vegas Sands Corporation $1,037 Assessed Taxpayers 6 Station Casinos Incorporated $857 2018-2019 7 NEWMONT MINING $662 8 Station Casinos Incorporated $522 9 BARRICK MINING $504 10 Ruby Pipeline LLC $439 TOTAL $14,281 Source: Nevada Department of Taxation MINING THROUGH UNCERTAINTY 42

Mining-Related 3.1% Roll Assessed Value by Class Other 96.9% 2017-2018 Source: Nevada Department of Taxation MINING THROUGH UNCERTAINTY 43

Net Proceeds of Minerals Taxes Paid By Nevada Mining Industry, Including Royalty Recipients (In Millions) $255.6 $216.7 $171.0 $163.0 $155.1 $136.6 $125.9 $103.2 $101.6 $97.6 $91.8 $75.7 $62.6 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 Source: Nevada Department of Taxation MINING THROUGH UNCERTAINTY 44

Share of Net Proceeds Tax Generated by Specific Minerals 2018 Copper Geothermal 2.7% 1.3% Gypsum 0.05% $12 $126 M 6 M Oil 0.3% Other Gold/Silver 3.8% 91.9% Total Net Proceeds Tax Generated Source: Nevada Department of Taxation (Operators and Royalties Combined) MINING THROUGH UNCERTAINTY 45

Share of Net Proceeds Tax Generated by Specific Minerals 2018 $11 $116 M 6 M Other 8.1% Gold/Silver 91.9% Net Proceeds Tax Generated by Gold/Silver Source: Nevada Department of Taxation (Operators and Royalties Combined) MINING THROUGH UNCERTAINTY 46

Net Proceeds Tax Generated by County 2018 | In Millions $892.9 $367.9 $343.5 $232.7 $218.6 $157.2 $44.9 $35.1 $29.7 $10.2 $8.2 $1.7 $0.8 $0.0 $0.0 $0.0 $0.0 Source: Nevada Department of Taxation MINING THROUGH UNCERTAINTY 47

Net Proceeds Tax Generated by County 2018 | In Millions $892.9 78.3% 78. 3% $367.9 $343.5 $232.7 $218.6 Of Total Net Proceeds Tax $157.2 Generated by Top 4 Counties $44.9 $35.1 $29.7 $10.2 $8.2 $1.7 $0.8 $0.0 $0.0 $0.0 $0.0 Source: Nevada Department of Taxation MINING THROUGH UNCERTAINTY 48

Total Estimated Major Taxes Paid by Nevada Mining $431.4 $388.1 $349.5 $314.0 $312.2 $292.3 $278.9 $245.8 $235.5 $223.6 $203.7 $255.6 $216.7 $171.0 $163.0 $155.1 $136.6 $125.9 $103.2 $101.6 $97.6 $91.8 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 Net Proceeds Sales/Use Tax Property Tax Modified Business Tax Source: Nevada Department of Taxation, NvMA Member Survey, Natural Resource Industry Institute (2008 – 2010), Industry Surveys Note: Historical figures may be adjusted to reflect the latest available information. MINING THROUGH UNCERTAINTY 49

What Do Education Funding Formula Changes Mean for Mining? MINING THROUGH UNCERTAINTY 50

Education Funding Under the Nevada Plan

Education Funding Under the Nevada Plan

How Much is Nevada ▪ Is it the $1.6 billion reported as total Distributive School Account resources in the executive budget? Spending on K12 ▪ Is it the $2.2 billion reported in the Nevada Comprehensive Annual Financial Education? Report, State Spending Analysis? ▪ Is it the $2.3 billion reported as the legislatively approved total Department of Education budget in the Fiscal Appropriations Report? ▪ Is it the $2.9 billion reported as total regular support in the Distributive School Account? ▪ Is it the $3.2 billion reported as total required state support in Distributed School Account? ▪ Is it the $3.9 billion reported as total operating expenditures in the state’s Nevada Plan summary?

How Much is Nevada Spending on K12 $5.0 $5.0B Education? There are more than 80 state, local and federal revenue resources that have been dedicated to education programs; they are expected to generate approximately $5.0B in FY2020 and $5.1B in FY2021

How Much is Nevada The he differen ferences ces are e significant, gnificant, limiting g transpar parenc ency and nd creat eating confus fusion on Spending on K12 $10,197 Education? $6,052 Basic Per Pupil Support Total Education Resources Per Pupil (Gov Rec FY2020) (FY2020)

Student Enrollment Nevada School Districts Humbo bold ldt Washoe shoe Elko 3,480 480 64,5 ,500 00 9,840 840 Nevada ada is ho home e to one of the Pers rshing Land nder 690 690 Storey nation’s largest school districts 1,000 000 440 440 Eure reka Churc rchi hill Whit ite e Pine ne (i.e., ., the Clark k County y School ool 270 270 3,250 250 2,230 230 Cars rson n City y Distric ict) t) and some e of its 7,760 760 Mine nera ral Nye ye 550 550 5,240 240 smalles lest t school ol distr tric icts ts Esm smera ralda da Linc ncoln Dougl glas 70 70 980 980 5,840 840 Lyon on 8,680 680 Clark ark 324, 4,00 000

Transparency How much is being spent on education, where the funding is coming from and where is it spent Student-Centered Recognize the differences in cost per student, allocate funding accordingly SB 543 Geographic Diversity Guiding Principles Recognize the differences in each school district, allocate funding accordingly Hold Harmless Focus on allocation of incremental revenue, minimizing reallocation at student expense Classroom-focused Support classroom instruction and programming that directly improves student achievement

The Core Elements of SB543 1 4 5 2 3 Creat eation ion of Creat eation ion of Replace lace the he Creat eation ion of Enh nhanc anced ed the he Nevada vada the he Educati ation on Nevada vada Plan with h the he Commis ission sion Reporti orting g and nd Educati cation on Fun und Stabili bilization zation the he Pupi upil-Centere entered d on n School ool Acc ccou ountabili tability ty Accoun ount Fun undin ing g Plan an Fun undin ing at All Lev evels els

STEP 1 State St te of Nevada da Identify all non-federal resources available to fund Educati ation on Fu Fund education programs (see, Element 1) STEP 2 State te Admin. min. and nd Allocate resources necessary to fund state Oversig ersight t Pro rograms rams administration, oversight and non-district programs (i.e., funds not allocated to districts) STEP 3 Pupil-Centered Base se Fun unding ding Ensure that base funding is made whole such that (Inflation + allocations made to all students are not diminished to Enrollment Growth) increase allocations to selected students Funding Model STEP 4 Weighted ted Fun unding Additional funds are directed to weighted categories (Allocation of All Other in proportion to the gap between their current Funds) funding and targets under full adequacy Exc xces ess Allocati ocation on STEP 5 (Distribution of At the point where there is parity in funding relative Funds After Parity) to full adequacy, funds are proportionally allocated

NDE/APA K12 Base Funding Allocation Recommendation “Successful Schools” Base Equity Allocation Adjustments Small School District Adjustment Necessarily Small Schools Adjustment Comparable Wage Index

Weighted Funding Base Funding Classifications Funds Allocated to Every Student in the State + 1 Special Education Students Existing Categorical Funding 2 English Language Learners All Funds Currently Allocated to Programs Targeting Weighted Students Remain with + Weighted Students At-Risk Students (those living 3 at or near the poverty level) Incremental Funding 4 Gifted and Talented Students All Funds After Base Funding is Increased by Inflation are Allocated to Weighted Student Programs Until Those Programs are Fully Funded

District-Level Impacts and Hold Harmless/True-Up Approach True-Up. Hold Harmless. Incremental K12 education funds will be All school districts will be frozen at allocated to school districts that are FY2020 funding levels, ensuring that currently receiving less funding than any school district that would receive they would under the student-centered less funding under the student- funding model before any other centered funding model does not allocations are made, allowing them to receive any less money that it did in be made whole as additional K12 the current school year. education funding is made available.

Impacts for Mining ▪ Nevada’s Constitutional Conflict ▪ Mining Tax Dollars are the First Education Dollars Distributed Under the New Formula, Must be Returned to the County of Origin ▪ If Mining Tax Dollars are Greater than the Total Amount of Funds that Would Otherwise be Allocated Under the Formula, Those Funds are “Authorized for Expenditure as a Continuing Appropriation for the Purpose of Mitigating the Adverse Effects of the Cyclical Nature of the Industry of Extracting and Processing Minerals on the Ability of the County School District to Offer its Pupils a Reasonably Equal Educational Opportunity.” MINING THROUGH UNCERTAINTY 63

Where Do We Go From Here? ▪ Implementation and Execution ▪ July 1, 2019 Effective Date ▪ July 1, 2021 Effective Date ▪ Communication and Messaging ▪ Public Sector ▪ Private Sector ▪ Commission on Education Funding ▪ Funding Adequacy

What are the Impacts of Mining in Nevada? MINING THROUGH UNCERTAINTY 65

Employment Impacts for Nevada Mining Industry Operations 2018 11,200 10,112 8,081 29 29,3 ,393 93 Total Jobs Supported by Nevada Mining Industry Operations Direct Indirect Induced Source: U.S. Bureau of Labor Statistics; Nevada Department of Taxation; IMPLAN; Applied Analysis MINING THROUGH UNCERTAINTY 66

Employment Impacts for Nevada Mining Industry Operations 2018 34,495 32,904 32,234 29 29,3 ,393 93 30,462 30,162 29,350 29,754 29,393 Total Jobs Supported by Nevada Mining Industry Operations 2011 2012 2013 2014 2015 2016 2017 2018 Source: U.S. Bureau of Labor Statistics; Nevada Department of Taxation; IMPLAN; Applied Analysis MINING THROUGH UNCERTAINTY 67

Wage/Salary Impacts for Nevada Mining Industry Operations 2018 $1.3 B $2. $2.4 B 4 B $0.7 B $0.5 B Total Labor Income Supported by Nevada Mining Industry Operations Direct Indirect Induced Source: U.S. Bureau of Labor Statistics; Nevada Department of Taxation; IMPLAN; Applied Analysis MINING THROUGH UNCERTAINTY 68

Wage/Salary Impacts for Nevada Mining Industry Operations 2018 $2.76 B $2.64 B $2.58 B $2. $2.4 B 4 B $2.49 B $2.43 B $2.41 B $2.40 B $2.36 B Total Labor Income Supported by Nevada Mining Industry Operations 2011 2012 2013 2014 2015 2016 2017 2018 Source: U.S. Bureau of Labor Statistics; Nevada Department of Taxation; IMPLAN; Applied Analysis MINING THROUGH UNCERTAINTY 69

Value-Added Impacts for Nevada Mining Industry Operations 2018 $4.2 B $6. $6.3 B 3 B Total GDP Supported by Nevada Mining $1.2 B Industry Operations $0.9 B Direct Indirect Induced Source: U.S. Bureau of Labor Statistics; Nevada Department of Taxation; IMPLAN; Applied Analysis MINING THROUGH UNCERTAINTY 70

Value-Added Impacts for Nevada Mining Industry Operations 2018 $7.3 B $6.9 B $6.8 B $6.6 B $6.3 B $6.0 B $5.9 B $6.1 B $6.3 B $6. 3 B Total GDP Supported by Nevada Mining Industry Operations 2011 2012 2013 2014 2015 2016 2017 2018 Source: U.S. Bureau of Labor Statistics; Nevada Department of Taxation; IMPLAN; Applied Analysis MINING THROUGH UNCERTAINTY 71

Economic Output for Nevada Mining Industry Operations 2018 $7.9 B $11.4 $11 .4 B B Total Economic Output Generated by Nevada Mining Industry Operations $2.0 B $1.5 B Direct Indirect Induced Source: U.S. Bureau of Labor Statistics; Nevada Department of Taxation; IMPLAN; Applied Analysis MINING THROUGH UNCERTAINTY 72

Economic Output for Nevada Mining Industry Operations 2018 $14.0 B $13.0 B $13.0 B $12.1 B $11.4 B $11.1 B $10.9 B $11.3 B $11.4 $11 .4 B B Total Economic Output Generated by Nevada Mining Industry Operations 2011 2012 2013 2014 2015 2016 2017 2018 Source: U.S. Bureau of Labor Statistics; Nevada Department of Taxation; IMPLAN; Applied Analysis MINING THROUGH UNCERTAINTY 73

What is the Outlook for the Mining Industry Nationally ? MINING THROUGH UNCERTAINTY 74

National Economy 2019 Annual Survey “Right Direction” Prior Year Comparison Refused/No 79.6% Answer 10.2% Wrong Direction 10.2% 75.0% Right Direction 79.6% 2018 2019 Source: NvMA 2019 Survey MINING THROUGH UNCERTAINTY 75

Investment Attractiveness Index United States Median: 74.0 93.0 86.1 84.3 83.9 79.9 74.5 74.0 72.5 70.7 70.4 69.3 56.6 52.9 Source: Fraser Institute Survey of Mining Companies (2018) and Applied Analysis MINING THROUGH UNCERTAINTY 76

Investment Attractiveness Index Growth United States 27.6% 13.9% 11.4% 10.0% 8.8% 7.8% 6.6% 6.1% 3.5% 2.2% -0.4% -2.9% -6.6% Source: Fraser Institute Survey of Mining Companies (2017 vs. 2018) and Applied Analysis MINING THROUGH UNCERTAINTY 77

Policy Perception Index United States Median: 90.3 99.3 96.3 94.7 93.8 93.9 91.7 90.2 90.3 85.2 85.5 81.2 77.8 69.6 Source: Fraser Institute Survey of Mining Companies (2018) and Applied Analysis MINING THROUGH UNCERTAINTY 78

Policy Perception Index Growth United States 23.0% 17.6% 16.8% 13.7% 13.6% 12.1% 11.6% 11.2% 11.0% 9.7% 7.5% 7.2% 1.1% Source: Fraser Institute Survey of Mining Companies (2017 vs. 2018) and Applied Analysis MINING THROUGH UNCERTAINTY 79

Best Practices Mineral Potential Index United States Median: 61.5 88.8 86.5 78.8 76.3 70.0 66.7 61.5 60.7 58.7 57.7 57.1 47.9 36.4 Source: Fraser Institute Survey of Mining Companies (2018) and Applied Analysis MINING THROUGH UNCERTAINTY 80

Best Practices Mineral Potential Index Growth United States 58.2% 15.6% 9.3% 8.2% 5.3% 3.8% 1.3% 0.6% -0.8% -10.2% -12.9% -13.5% -15.0% Source: Fraser Institute Survey of Mining Companies (2017 vs. 2018) and Applied Analysis MINING THROUGH UNCERTAINTY 81

What is the Outlook for the Mining Industry Internationally ? MINING THROUGH UNCERTAINTY 82

Investment Attractiveness Index 2018 2017 2018 Index Location Rank Rank Score Score 3 93.3 1 NEVADA (US) 5 91.5 2 Western Australia 3 Saskatchewan (CA) 2 90.0 4 Quebec (CA) 6 88.4 5 Alaska (US) 10 86.1 Source: Fraser Institute Survey of Mining Companies (2018) and Applied Analysis MINING THROUGH UNCERTAINTY 83

Policy Perception Index 2018 2017 2018 Index Location Rank Rank Score Score 3 100.0 1 Saskatchewan (CA) 5 99.3 2 NEVADA (US) 3 Finland 2 99.2 4 Rep. of Ireland 1 97.7 5 Western Australia 17 96.7 Source: Fraser Institute Survey of Mining Companies (2018) and Applied Analysis MINING THROUGH UNCERTAINTY 84

Best Practices Mineral Potential Index 2018 2017 2018 Index Location Rank Rank Score Score 8 88.8 1 NEVADA (US) 4 88.0 2 Western Australia 3 Alaska (US) 5 86.5 4 NW Territories (CA) 19 86.0 5 Nunavut (CA) 10 84.6 Source: Fraser Institute Survey of Mining Companies (2018) and Applied Analysis MINING THROUGH UNCERTAINTY 85

Regional Median Investment Attractiveness 81.2 75.5 74.0 68.3 66.3 59.8 56.6 54.1 Argentina Africa Latin America Oceania Europe United States Australia Canada and Caribbean Source: Fraser Institute Survey of Mining Companies (2018) and Applied Analysis MINING THROUGH UNCERTAINTY 86

Regional Median Investment Attractiveness Growth 16.5% 9.3% 7.1% 5.5% 3.8% 1.5% 0.5% -7.6% Argentina Africa Europe Oceania United States Australia Canada Latin America and Caribbean Source: Fraser Institute Survey of Mining Companies (2017 vs. 2018) and Applied Analysis MINING THROUGH UNCERTAINTY 87

Regional Median Policy Perception Index 90.3 89.9 85.4 84.1 64.3 61.1 60.8 56.5 Argentina Oceania Africa Latin America Australia Europe Canada United States and Caribbean Source: Fraser Institute Survey of Mining Companies (2018) and Applied Analysis MINING THROUGH UNCERTAINTY 88

Regional Median Policy Perception Index Growth 28.6% 15.5% 11.2% 9.3% 8.5% 7.5% 2.4% -7.9% Argentina Europe Africa Canada United States Australia Latin America Oceania and Caribbean Source: Fraser Institute Survey of Mining Companies (2017 vs. 2018) and Applied Analysis MINING THROUGH UNCERTAINTY 89

Trade Wars: What Do They Mean for Us? MINING THROUGH UNCERTAINTY 90

China’s Dominance of the Rare Earth Market ▪ Seventy percent of rare earths are mined in the Rare Earth Extraction in 2018 People’s Republic of China, and processes a greater percentage of the rare earths annually ▪ Eighty percent of U.S. imports of usable rare Others earths also come from China 30% People's Republic of ▪ Earlier this year, the Chinese government China suggested it would lower the amount of rare 70% earths supplied to the U.S. as retaliation for increased tariffs on Chinese goods Source: South China Morning Post MINING THROUGH UNCERTAINTY 91

Revitalizing the Rare Earth Market in the U.S. ▪ The Mountain Pass mine, located an hour away Rare Earth Extraction in 2018 from Las Vegas, is a potential part of the answer to a reduced supply of rare earth minerals ▪ From the 1960s to the 1980s, the United States was a leader in extracting these minerals, and Mountain Others Pass was a big part of that 30% People's Republic of ▪ Despite not being mined since 2015, Mountain Pass China is still the largest source of rare earths in the country 70% ▪ MP Materials, based in Las Vegas, is seeking to reestablish rare earth mining and help reduce dependency on imported rare earths Source: South China Morning Post; Financial World; News 3 Las Vegas MINING THROUGH UNCERTAINTY 92

MINING THROUGH UNCERTAINTY 93

MINING THROUGH UNCERTAINTY 94

What About Electric Vehicles and Batteries? MINING THROUGH UNCERTAINTY 95

Electric Vehicle Sales Rise Dramatically ▪ 64% increase in EV sales 2017 to 2018 Global EV Sales 79% in the U.S. ▪ 1,182,000 China ▪ 78% in China 663,000 34% in Europe ▪ 409,000 Europe 306,000 ▪ More than 1.27 million EVs are on the road in the U.S. as 358,000 United States of June 30, 2019 200,000 97,000 Others 52,000 ▪ In Q2 2019, approximately 85,000 EVs were sold in the U.S. 53,000 Japan 56,000 ▪ Q2 2019 sales increased 23% over Q2 2018 sales 2018 2017 Source: Edison Electric Institute and EV-Volumes.com MINING THROUGH UNCERTAINTY 96

Electrifying Global Transportation MINING THROUGH UNCERTAINTY 97

Copper and Electric Vehicles ▪ Demand for copper in vehicles expected to Pounds of Copper Required increase by 1,700 kilotons by 2027 Battery Electric Bus 814 ▪ 56% of all light commercial vehicles and 31% Hybrid Electric Bus 196 of all medium commercial vehicles will be electric by 2040 Battery Electric Vehicles (EVs) 183 Plug-in Hybrid EVs 132 Hybrid EVs 85 Conventional Cars 49 Source: Edison Electric Institute and the Institute for Electric Innovation MINING THROUGH UNCERTAINTY 98

Exponential Energy Storage Growth Lithium, Cobalt, Nickel and other minerals needed MINING THROUGH UNCERTAINTY 99

MINING THROUGH UNCERTAINTY 100