1 U.S. Environmental Protection Agency Office of Air Quality Planning and Standards

Health and Environmental Impacts Division Air Economics Group

Final Gold Mine Ore Processing and Production NESHAP

– Economic and
Small Business Analysis (December 2010)

This report is the economic impact ana lysis for the final gold mine ore processing and production NESHAP

, which will be signed as per a court

- ordered schedule on December 16

, 2010

. Implementation of the final rule is required b y 3 years after promulgation of the final
rule. Details on the final rule can be found in the preamble contained in the public docket for this rulemaking.

There are 10 firms that are ultimate parent com panie s that own gold mines impacted by
this NESHAP . Most of these firms are multinational, and the majority of these firms have revenues above $1 billion for the last full year reported (2008) . None of these firms are a small business as defined by the Small Business Administration (S BA) for this indust ry (NAICS

212221 )

– 500 employees or less for a parent owner of gold mines

. 1 Thus, there is no significant economic impact on a substantial number of small entities (SISNO SE) as a result of this rule

.

Currently, the gold ore mining industry in the US i s doing relatively well from a historical standpoint . Gold ore mining in the US is driven by the international spot market for gold, and current spot prices are now (as of Decem ber 2010) at the highest level recorded on a nominal (not inflation

- adjusted) basis

– over $1,400/troy ounce.

This analysis identified the businesses that will be affected b y this rule and provides an analysis at a screening level to assist in determini ng whether this rule is likely to impose a significant economic imp act on affected businesses. The analysis employed here is a “sales test” that computes the annualized compliance costs as a share of sales for each company.

The “sales test” is the impac t methodology EPA employs in economic impact analysis such as this one as opposed to a “profits test”, in which annualized compliance costs are

c alculated as a share of profits

. 2 This is because revenues or sales data is commonly available
data for entiti es normally impacted by EPA regulations and profits data normally made available is often not the true profits earned by firms due to accounting and tax considerations. Firms and entities often have ways legally ava ilable in the tax code to minimize their reported profits; thus, using repo rted profits may lead to a less than accurate estimate of the economic impact of a regulation to an affected firm or entity and their consumers.

1 U.S. Small Business Administration, Tab le of Size Standards. November 5, 2010 . Found on the Internet at http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf

. 2 More information on sales and profit tests as used in analyses done by U.S. EPA can be found at http://www.epa.gov/sbrefa/documents/rfaguidance11

- 00

- 06.pdf

, pp. 32

- 33.2 The total annualized cost (TAC) of the final rule is $9.1 million (2008 d o llars). These

costs reflect the requi rement of additional monitoring, reporting, and recordkeeping (MRR) th at is in the rule, and some amount of additional emissions control required with a focus on estimating the impacts of the rule on companies that require additional controls for compliance

. Roughly 12 percent of the TAC ($1.06 million) is from the monitoring requ irements, while the remaining 88 percent ($8.0 million) is from additional controls necessary to meet the rule requirements. No impacts for the beyond

- the

- floor options are included in this economic impact analysis. For more information on the cost analysis, please refer to “Estima tes of Impacts for the
Final Mercury Emission Standards for Gold Mine Ore Processing and Production,” prepar ed b y the U.S. EPA and available in the docket for this rulemaking.

Table 1 lists the 10 ultimate parent co mpanies impacted by the rule , t he costs of the rule for each company basis, the annual revenues for these companies, and then the impact to the

co m pany on a cost to sales basis. Revenues for each firm were taken from the last available full year of financial data. On a firm by firm basis, the ann u alized cost is no more than 0.85 percent
of revenue for any affected firm, and the annualized cost is only 0.04 percent of revenue on average for any affected firm. It should be noted that this analysis does not presume any incidence of the costs on the consumers of gold and other metals mined by t hese companies. Thus, no estimate of the impact of this rule on gold consumers is included in this report. However, the direct impact of this rule appears quite minor, and thus it is reasonable to infer that the impact on gold consumers from this rule sh ould also be minor. The TAC is taken from the cost memorandum prepared by U.S. EPA for t he final rule and in that memorandum can be found more information on the cost analysis

.

Table 1

. Gold Ore Mining Process Co m panies Affected by the Final Rule
, and Impacts on Them

Ultimate Parent Company TAC per Company (2008$)* Annual Revenues per Company (2008) TAC per Revenues for Each Company (in %)

Barrick Gold $1,764 ,406 $8,136,000,000 0.0212 % Newmont Mining $6,112 ,284 7,700,000,000 0.078 %

Kinross $135,335 2,412,100,000 0.0056% Kennecott (owned by Rio Tinto)** $173 ,427 6,300,000,000 0.0024 %

Gold Corp.

$71,497 2,419,600,000 0.0030%
Jipangu $242 ,716 4,972,600,000 0.0051%
Anglo

- Gold Ashanti $69,632 3,743,000,000 0.0019% Queenstake Resources (owned by Yukon

Nevada Gold)** $401 ,781 48,940,000 0.82 % Coeur D'Alene Mining $27,242 189,465,000 0.014%

New Gold $69,632 218,135,000 0.032%

* TAC = Total Annualized Cost **Rio Tinto is the parent company of Kennecott; Yukon

- Nevada Gold is the parent company of Queenstake Resources3 References for Parent Company Data:

Barrick Gold http://www.barrick.com/News/PressReleases/PressReleaseDetails/default.aspx?PressReleaseId=6d028
7d6

- 9627

- 4c0f

- 89fd

- 3a1ee5270277
Newmont Mining http://seekingalpha.com/article/190726

- newmont

- mining

- corporation

- q4

- 2009

- earnings

- call

- transcript

Kinross http://www.kinross.com/news

- articles/2010/kinross

- 2009

- production

- increases

- 22

- percent,

- revenue

by

- 49

- percent.aspx Kennecott (owned by Rio Tinto) http://www.riotinto.com/shareholders/12331_annual_results_2009.asp
Gold Corp. http://www.goldcorp.com/_resources/GC_FactSheetNov09.pdf
Jipangu

Anglo

- Gold Ashanti http://www.anglogold.com/subwebs/InformationForInvestors/Reports08/AnnualReport08/f/group _inc
ome.htm Queenstake Resources (owned by Yukon

Nevada Gold) http://www.yukon

- nevadagold.com/i/pdf/2008

- 12

- 31_YNG

- FS

- MDA.pdf

Coeur D'Alene Mining http://www.coeur.com/uploads/file/Bowne%20FINAL.pdf

New Gold http://newgold.com/Theme/NewGold/Files/documents_financials/resource

New%20Gold%20AR%20CDN%20GAAP%20December%202008

- SEDAR.pdf