gas industry has in today’s Alaska economy. But for some of Alaska’s ru- ral regions, it has an important status. In these areas, a mine may be the only significant large private employer in the area. It can raise wages and create significant high-paying employment opportunities where few exist. Taxes from a large mine can also provide the funding for local government where none now exists. The Red Dog Mine creates this situation currently for the Northwest Arctic Borough. Donlin Gold project, should it begin production, may create similar benefits for a por - tion of the Kuskokwim. Smaller mines identified in this report may create employment and income benefits for rural communities.
enue to the state government come from rents, royalties, mining license tax, and corporate income taxes. These revenues are all based on net profits. This analysis has not attempted to estimate mining profits, which will heavily depend on mineral prices. Be- cause we cannot predict profits, the best we can do is presume that state government revenue would increase (or decrease) proportionally to the in- dustry size. Over the four years from 2016 to 2019, the mineral industry paid $66.6 million per year, which is similar to state revenues collected by the state from the commercial fishing indus - try and the tourism industry. This is the revenue which would presumably change proportionally with the min- eral industry. However, this assumes that prices remain at today’s levels. If prices increase, profits and state rev - enue would increase more than pro- portionally. However, no industry, including mining, replaces the oil in- dustry in Alaska’s economy, and this level of state revenue would not do so. The mineral industry also paid another $27 million per year to in- dependent state agencies: the Alas- ka Railroad and the Alaska Industrial Development and Export Authority. It annually paid another $36.8 million to municipalities. An important aspect of the mineral revenue to state government is that it provides true net returns to the state budget. The industry pays more in royalties, taxes, and fees than the state expends on administration and en- forcement. A 2022 ISER study estimat- ed that the state government spends only a small amount regulating and promoting revenue from the mining industry, $6.7 million per year. This is less than a tenth of what the industry pays the state. Alaska Native Corporation Revenues Through a provision of the Alas- ka Native Claims Settlement Act, 70 percent of revenue due to minerals on land owned by Alaska Native Regional Corporations is shared with all Alaska Native Regional Corporations, and half of that is re-shared to Alaska Native Village Corporations. Royalties paid to the NANA Corpo - ration from the Red Dog Mine illustrate the impact of this provision. Since the mine was founded, NANA has received approximately $2.4 billion from the
MINING, CONTINUED from PAGE 27
The favorable scenario’s value, $5.6 billion would be responsible for almost a quarter of what comes into Alaska today. Even in 20 years this would be a significant level of exports — more than the federal government brings into Alaska today and much more than any other industry except oil. It would raise the basic industries’ input to Alaska’s economy as it is sized to- day by 15 percent. This would bring an important statewide increase into the economy, even accounting for overall economic growth in 20 years. Regional Effects While mining is an important statewide industry, it will not achieve the dominant status that the oil and
State Government Revenue The major sources of mining rev-
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The Alaska Miner
Spring 2022
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