Obama budget calls for mineral royalties, abandoned mine fees

President Obama's FY13 budget proposal calls for 5% gross royalty on hardrock minerals, a new fee to clean up abandoned mines, and changing from mining claims to leases on federal lands.

The BLM announcement of the budget plan summarizes the key points:

The first component of this proposal addresses abandoned hardrock mines across the country through a new AML fee on hardrock production. The Administration proposes to hold the hardrock mining industry responsible for abandoned hardrock mines, just as the coal industry is held responsible for abandoned coal sites. The proposal will levy an AML fee on the production of hardrock minerals on both public and private lands and will be charged on the volume of material displaced after January 1, 2012.

The legislative proposal would also institute a leasing process under the Mineral Leasing Act of 1920 for certain minerals (gold, silver, lead, zinc, copper, uranium, and molybdenum) currently covered by the General Mining Law of 1872. After enactment, mining for these metals on Federal lands would be governed by the new leasing process and would be subject to annual rental payments and a royalty of not less than five percent of gross proceeds. Half of the receipts would be distributed to the States in which the leases are located and the remaining half would be deposited in the Treasury. Existing mining claims would be exempt from the change to a leasing system, but would be subject to increases in the annual maintenance fees under the General Mining Law of 1872. However, holders of existing mining claims for these minerals could voluntarily convert their claims to leases.

Note that the AML fee would be on the volume of material displaced, including overburden, waste rock, and tailings, not just on the volume of minerals produced.