Kennecott landslide could reduce tax payments

Local officials bracing for tax revenue hit from landslide at Kennecott copper mine

Associated Press
Kennecott announces layoffs after landslide
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FILE - This April 11, 2013, file photo shows a broken roadway at the Kennecott Utah Copper Bingham Canyon Mine after a landslide, in Bingham Canyon, Utah, near Salt Lake City. Kennecott Utah Copper Corp. has resumed mining at landslide-devastated Bingham Canyon mine at a greatly reduced level that could mean a big hit for Salt Lake County taxpayers, who will have to make up the difference in the mine's valuation, which is based largely on copper output. (AP Photo/The Deseret News, Ravell Call, File) SALT LAKE TRIBUNE OUT; MAGS OUT

SALT LAKE CITY (AP) -- The landslide at a copper mining pit in Utah that loosened enough material to fill two-thirds of the Panama Canal could lower tax revenue, especially for local schools and a fire district, officials said Wednesday.

Kennecott Utah Copper Corp. paid about $53 million in taxes last year in Salt Lake County, said Darrin Casper, the county's chief financial officer.

The company's tax bill depends largely on copper output and prices, he said. Kennecott has halved its production goal for 2013. Market analysts said the worst-case scenario has Kennecott losing sales from up to 165 million tons of refined copper in 2013, although officials are increasingly optimistic Kennecott can recover more quickly.

"The story for me is how well a job Kennecott has done trying to get back up and running," Casper said.

Kennecott resumed ore digging last weekend for the first time since the April 10 slide, but at a greatly reduced level, working along the edges of debris in the mountains west of Salt Lake City.

Casper said any reduction in Kennecott's tax payments will force other county taxpayers to make up the difference, but not until 2015. He said the county could feel little impact with new housing and business driving tax growth year after year. The Internet auction site eBay, for example, is opening a data center Friday in Draper that Casper said will be valued at around $60 million for tax purposes.

However, the Jordan and Granite school districts depend more heavily on Kennecott. District officials said Wednesday they're trying to assess the potential tax loss. Kennecott represents just over 16 percent of the Jordan School District's tax base, said district spokesman Steven Dunham. Granite couldn't immediately specify how much Kennecott contributes to their budgets.

The U.S. Geological Survey has determined the landslide unleashed 128 million cubic yards of rock and dirt into a mining pit nearly a mile deep. It converted a weight figure provided by Kennecott and said it was enough rock and dirt to equal about two-thirds of the material removed for the Panama Canal.

"It was enormous," said Lynn Highland, a geographer with the U.S. Geological Survey in Denver. "I was floored by how big it was."

Company officials said about half of the material ended up in the bottom of the Bingham Canyon mine, burying equipment in piles as high as 300 feet. The rest of the debris clings to the terraced steps of the open pit.

The USGS said removing all of the material would take about 25 million dump truck loads — using garden-variety dump trucks, not the Kennecott mining trucks with 12-foot tires.

The Bingham Canyon mine produced nearly 25 percent of U.S. copper supplies in 2011, Kennecott said.

The landslide was by no means the world's largest earth movement. The 1980 eruption of Mount St. Helens loosened the largest landslide in modern history — 3.7 billion cubic yards, geologists say.

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