As San Juan County considers tax hike, a struggling copper mine owes $1.4 million

A San Juan County copper mine that hasn’t paid property taxes since 2014 asked for a tax deferral last week, citing the Trump administration’s ongoing trade dispute with China and its impact on copper prices.

The Lisbon Valley Mining Co., which operates an open-pit mine and heap leach facility southeast of Moab, owes the county a total of $1.4 million in back taxes, fees and interest. Last week, it asked the San Juan County Commission to approve a 36-month payment plan and to waive $250,000 in penalties accrued over the past five years.

The request was made at a work session in which the County Commission also discussed a proposal to raise property taxes in the county to address deficits in multiple county funds.

County Clerk John David Nielson presented a property tax increase proposal to Commissioners Bruce Adams and Kenneth Maryboy, who agreed to hold a public hearing on Dec. 4 on the proposed hike, which could bring in $575,000 in additional annual revenue, less than half of what the copper mining company owes the county.

As of 2018, Lisbon Valley Mining Co.’s 4,500-acre mine, which is located mostly on Bureau of Land Management and state trust lands, had a taxable value of $21.5 million and owed just under $300,000 per year in property taxes.

(Zak Podmore | The Salt Lake Tribune) Earth moving equipment at the Lisbon Valley Mining Company's copper mine facility in eastern San Juan County in Oct. 2019.

But the company’s chairman, George Shaw, told the commission its mines have been mostly idle since April 2016.

“We produce only copper, no other byproducts, so we’re totally dependent on the price of copper in order to make money for the business,” Shaw said, adding the copper market went through a significant downturn from 2015 to 2018.

“The market has returned,” he continued. “[But] in the course of this past year, the trade dispute has affected copper prices yet again — it’s created quite a bit of uncertainty — in that China consumes half the world’s metals, including copper.”

Shaw said the past four years have been “very, very tough,” and the company’s 65 employees have shared the burden of the downturn as have vendors, creditors and investors.

The mine currently transports crushed material from a pit mine to heap leach pads, where the copper is dissolved from the ore with dilute sulfuric acid. The product is typically purchased by wire, rod and ammunition manufacturers in the Midwest, according to the company’s website.

Shaw said the company will apply for permits in the next several months to expand operations, which could extend the mine’s life if the trade dispute is resolved.

The mine underwent Chapter 11 bankruptcy in 2009, and the company broke off from its Canadian parent firm. Adams asked what would happen if the company couldn’t make its monthly payments, and Shaw replied that company officials would return to the county to renegotiate the terms.

“We understand your struggles and some of us feel your pain when considering the commodity markets,” said Adams, a recently retired rancher.

Officials contacted at Lisbon Valley Mining did not respond to requests for comment.

Maryboy and Adams voted to allow the company to pay $880,000 in back taxes from 2015 to 2017 in monthly installments over the next 36 months. It also must pay its 2018 tax bill in a lump sum by January.

The company asked for a waiver on the nearly $250,000 in late fees and interest it has accrued over the past few years, but County Administrator Mack McDonald said last week he did not believe the Commission agreed to the waiver. County and company officials did not respond to a request for comment on when the fees and interest will be paid.

(Zak Podmore | The Salt Lake Tribune) The Lisbon Valley Mining Company's open-pit copper mine in eastern San Juan County in Oct. 2019.

Both commissioners also voted to hold a public hearing to discuss the tax hikes as is required under Utah’s Truth-in-Taxation laws.

According to documents included in Nielson’s presentation, the county’s general fund recently reached its lowest balance in over 10 years, dropping below $1 million at the end of September. The general fund reached a September high point of $6.8 million in 2014 but has been in decline ever since.

Former Commissioners Phil Lyman and Rebecca Benally served alongside Adams during the fund’s most precipitous drop as the county became embroiled in numerous legal battles.

The county was sued by both the Navajo Nation and the Navajo Nation Human Rights Commission over voting rights issues, and the County Commission hired outside legal counsel to fight the designation of Bears Ears National Monument and to sue for title to a route in Recapture Canyon. From 2015 to 2018, the county spent $3 million on outside legal counsel and $1.1 million on the County Attorney’s Office.

In September, the current commissioners — Adams, Maryboy and Willie Grayeyes, who was absent at last week’s meeting — agreed to pay $2.6 million in legal fees to the Navajo Nation over one of the voting-rights cases.

Nielson noted deficits in the county’s library and health funds as well as the general fund. The current proposal would boost the tax burden by around $80 per year for houses valued at $200,000 to shore up all three funds.

Adams called the proposed increase “a pretty heavy lift” for residents, who already pay the highest property tax rates by percentage of any county in the state.

“It’s a difficult proposition to raise taxes,” he said, “but I’m willing to move forward in the process to identify to the public what the need is in the departments and see if that’s something that the public thinks is a valid consideration.”