Mineral Royalties:

Royalties in the Western States and in Major Mineral-Producing Countries

RCED-93-109: Published: Mar 29, 1993. Publicly Released: Apr 9, 1993.

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Pursuant to a congressional request, GAO: (1) reviewed how western mineral-producing states share the proceeds from nonfuel minerals extracted from their public lands; and (2) provided information on how Australia, Canada, and South Africa share the proceeds from minerals mined in those countries.

GAO found that: (1) 92 percent of federal lands are located in 12 western states; (2) the Mining Law of 1872 allows states to file claims giving them the right to mine and sell the minerals extracted without paying the federal government a royalty; (3) all of the 12 western mining states, except Nevada, allow mining on state-owned lands; (4) all states require miners to obtain a lease or mining contract before mining public lands; (5) 11 states that leased lands for mining purposes shared the proceeds from minerals mined on state lands; (6) 10 states shared proceeds from certain minerals extracted from any federal, state, or privately-owned lands; (7) five states assess a severance or excise tax on certain minerals extracted; (8) three states assess a mine license tax on all persons engaged in mining in the state; (9) two states assess more than one tax on state mining operations; (10) Australia's national government assesses an income tax on mining and the Canadian government imposes taxes similar to royalties on profits derived from mining; (11) in Australia, state governments commonly negotiate special royalty rates with companies that are seeking mineral leases for large-scale developments; (12) four Canadian provinces charge fixed-rate mining taxes, while other provinces have a progressive tax structure where rates increase when profits exceed a specified level; (13) in South Africa, nearly all mineral rights belong to the landowner; (14) the South African national government administers mining on federal and private lands; and (15) although South African mining operations do not pay a royalty, they do pay a higher rate of income tax than nonmining companies.

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