Report details mining industry's impact on South Dakota's economy

South Dakota State Roundup

Published October 1, 1995  | October 1995 issue

Even though a new permit for a gold mine in northwestern South Dakota hasn't been issued since 1988, and while much attention has been paid to growth in the tourism and gambling industries in recent years in the northern Black Hills, a recent report from the South Dakota Mining Association stresses the importance of mining to the area's economy.

"Mining remains a dominate economic component of the area," writes Michael Madden, University of South Dakota professor of economics. "For example, while more workers are required in the travel and gaming businesses, significantly higher earnings are generated in the mining industry."

Specifically, while the travel and gambling industries employ 2,750, nearly twice as many as the gold mining industry's 1,448, the mining industry generates nearly $55 million in earnings compared to about $33 million for travel and gambling. Those numbers are for Lawrence County in the northern Black Hills, Madden says, where direct and indirect mining earnings represent 22 percent of the county's private earnings.

"Some are suggesting we don't need mining as much," Madden says. But even though mining is less important to the local economy than 20 years ago when mining—and forestry—represented nearly all of the county's economic activity, Madden says mining's impact should not be overlooked, or taken for granted. Production has been stable in recent years, he says, but unless new mines are permitted in the near future, production will decrease. There are currently five large-scale gold mines in operation in South Dakota, all on private property in Lawrence County, with one permit pending, according to Madden.

Whether new permits will be granted, and how soon they might be granted, is "tough to call," says Dianna Miller executive director of the South Dakota Mining Association. Miller wouldn't speculate on the future of gold mining in the state, citing changing political climates and environmental concerns, but she says she is hopeful that production will remain stable.

Other findings by the report include:

  • In 1994, 556,398 ounces of gold were produced, 52.7 percent from underground operations, 47.3 percent from surfaces mines.
  • Surface mines processed nearly 7.5 million tons of ore and more than 25 million tons of waste rock last year.
  • There were about $232 million in combined operational expenditures in 1994, about three-quarters of that was spent in South Dakota, with labor costs totaling over $76 million.
  • Indirect job creation in other sectors, including transportation and construction, that are heavily impacted by the mining industry—over 1,200 such jobs are created by the mining industry, according to Madden's report. In addition, nearly 900 other jobs in the retail, restaurant and health service industries are supported by the mine.
  • The typical annual pay for a mine worker was about $36,700 per year in 1994, compared to $19,500 for all manufacturing workers in the state.
  • Mining operations paid $5.5 million in gold severance taxes last year, $4.5 million in state sales and use taxes, and $3.6 million in property taxes (over $2.3 million of those property taxes go to local school districts).

David Fettig