T ECHNICAL R EPORT
UCED 2015/16-17

THE PROJECTED ECONOMIC IMPACTS OF CONSTRUCTION AND OPERATION
ACTIVITIES OF THE KINGS VALLEY LITHIUM PROJECT in HUMBOLDT
COUNTY
Report Prepared by
Thomas R. Harris
Thomas R. Harris is a Professor in the Department of Economics and Director of the University of Center for Economic Development at the University of Nevada, Reno.
University Center for Economic Development
Department of Economics
University of Nevada, Reno
Reno, Nevada
(775) 784-1681
December 2015
The University of Nevada, Reno is an equal opportunity, affirmative action employer and does not discriminate on the basis of race, color, religion, sex, age, creed, national origin, veteran status, physical or mental disability or sexual orientation in any program or activity it operates. The University of Nevada employs only
United States citizens and aliens lawfully authorized to work in the United States.
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This publication, The Projected Economic Impacts of Construction and
Operation Activities of the Kings Valley Lithium Project in Humboldt
County, was published by the University of Nevada Economic
Development Center. This publication's statements, findings, conclusions, recommendations, and/or data represent solely the findings and views of the authors and do not necessarily represent the views of Western
Lithium Corporation, University of Nevada, Reno or any reference sources used or quoted by this study. Reference to research projects, programs, books, magazines, or newspaper articles does not imply an endorsement or recommendation by the authors unless otherwise stated.
Correspondence regarding this document should be sent to:
Thomas R. Harris, Director
University Center for Economic Development
University of Nevada, Reno
Department of Economics
Mail Stop 204
Reno, Nevada 89557-0204
UCED
University of Nevada, Reno
Nevada Cooperative Extension
Department of Economics
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THE PROJECTED ECONOMIC IMPACTS OF CONSTRUCTION AND OPERATION
ACTIVITIES OF THE KINGS VALLEY LITHIUM PROJECT in HUMBOLDT
COUNTY
Introduction
Mining is an important part of the rural economy in Nevada. Table 1 gives the direct employment in the Mining Sector for each county in Nevada for the second quarter of 2015. In the most extreme case, approximately 90% of the total employment in Eureka County was in the
Mining Sector. In Humboldt County, 25.05% of total county jobs, or 2,033 jobs, were in the
Mining Sector. For the state of Nevada as a whole, a total of 14,436 jobs were mining sector jobs in the second quarter of 2015 which is slightly over 1% of all jobs in the state.
Table 1: Nevada County Mining Employment, County Proportionate Share of Total State
Mining Sector Employment and Proportionate Share of County Employment,
2015, Quarter 2.
COUNTY
MINING
EMPLOYMENT
% of Nevada
Mining
Employment
Mining
Employment as % of Total Region
Employment
Carson City
Churchill
Clark
Douglas
Elko
Esmeralda
Eureka
Humboldt
Lander
Lincoln
Lyon
Mineral
Nye
Pershing
Storey
D
19
351
D
1,880
205
4,038
2,033
2,054
14
381
101
D
D
D
D
0.13%
2.43%
D
13.02%
1.42%
27.97%
14.08%
14.23%
0.10%
2.64%
0.70%
D
D
D
D
0.25%
0.04%
D
8.69%
52.03%
89.67%
25.05%
58.94%
1.18%
3.32%
8.38%
D
D
D
Washoe
White Pine
State of
147
1,252
1.02%
8.67%
0.07%
29.05%
Nevada 14,436 100.00% 1.16%
‘D’ Data undisclosed due to privacy guarantees.
Source: Nevada Department of Employment, Training and Rehabilitation: Quarterly Census of Employment and
Wages. Carson City, Nevada, 2015.
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In Nevada and Humboldt County, a segment of the Mining Sector is lithium mining.
Given the proposed new electric car and lithium battery industries coming to the state, these new industries should provide for the creation of a lithium battery cluster where Nevada lithium mines will play a significant part in the formulation of this economic cluster. Table 2 shows the direct employment for the Other Nonmetallic Mineral Mining and Quarrying Mining Sector where lithium mining is placed. Because lithium mining is aggregated in this larger sector, individual assessment of a lithium mine can become less focused. Because of reporting requirements by the U.S. Bureau of Labor Statistics, county level employment by the Other
Nonmetallic Mineral Mining and Quarrying Mining Sector will not be disclosed. However, table
2 shows there is current employment in this sector in the Nevada counties of Churchill, Clark,
Elko, Esmeralda, Lander, Lincoln, and Pershing. For the state, the Other Nonmetallic Mineral
Mining and Quarrying Mining Sector for 2015 in Quarter 2 had employment of 363 employees which was 0.03% of total state employment. Notice in Table 2, there is no current employment in the Other Nonmetallic Mining and Quarrying Mining Sector for Humboldt County. The construction and future operation of the Kings Valley Lithium mine would bring this sector to
Humboldt County and yield opportunities for the Humboldt County economy to actively contribute to the state’s new economic cluster of electric cars and lithium batteries. Therefore, the primary objective of the paper is to estimate the construction and operation impacts of the
Kings Valley Lithium Mining Project on the economy of Humboldt County.
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Table 2: Nevada County Employment, County Proportionate Share of Total State
Other Nonmetallic Mineral Mining and Quarrying Mining Sector Employment,
Proportionate Share of Total State Other Nonmetallic Mineral Mining and
Quarrying Mining Sector and Proportionate Share of County and State
Employment, 2015, Quarter 2.
COUNTY
Nonmetallic
Mineral
Mining and
Quarrying
Mining Sector
Employment
% of Nevada
Other
Nonmetallic
Mineral
Mining and
Quarrying
Employment
Other
Nonmetallic
Mining and
Quarrying
Employment as
% of Total Region
Employment
Carson City
Churchill
Clark
Douglas
Elko
Esmeralda
Eureka
Humboldt
Lander
Lincoln
Lyon
Mineral
Nye
Pershing
Storey
Washoe
White Pine
0
0
D
0
0
D
D
0
0
0
0
D
D
0
0
D
D
0
0
D
0
0
D
D
0
0
0
0
D
D
0
0
D
D
0
0
D
0
0
D
D
0
0
0
0
D
D
0
0
D
D
State of Nevada 363
‘D’ Data undisclosed due to privacy guarantees.
100.00% 0.03%
Source: Nevada Department of Employment, Training and Rehabilitation: Quarterly Census of Employment and
Wages. Carson City, Nevada, 2015.
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Some Basic Concepts of County Economics and
Income and Employment Multipliers
Figure 1 illustrates the major dollar flows of goods and services in any economy. The foundation of a county’s economy is the economic sectors which sell some or all of their goods and services to buyers outside of the county. Such an economic sector is classifies as a basic industry. The flow of products out of, and dollars into, a county is represented by the two arrows in the upper right portion of Figure 1. To produce these goods and services for export outside the county, the basic sector purchases inputs from outside of the county (upper left portion of
Figure 1), labor from the households of the county (left side of Figure 1), and inputs from service sectors located within the county (right side of Figure 1), and inputs from service sectors located within the county (right side of Figure 1). The flow of labor, goods and services in the county is completed by households using their earnings to purchase goods and services from the county’s service sectors (bottom of Figure 1). It is evident from the interrelationships illustrated in Figure
1 that a change in any one sector of a county’s economy will have reverberations throughout the entire economic system of the county.
Consider, for instance, the construction and operation of the Kings Valley Lithium mine, and its impacts on the local or area economy. The Kings Valley Lithium mine’s activities can be considered a basic industry as it draws dollars from outside the area. These dollars may hire people from the household sector such as laborers to work in the mine. However, there are additional local economic linkages from the Kings Valley Lithium mine’s purchases of goods and services from the local service sectors. These include businesses such as restaurants, gas stations, hotels and other retail establishments. As earnings increase in these businesses, they will hire additional people and buy more inputs from other businesses. Thus the change in the economic base works its way throughout the entire local economy.
The total impact of a change in the economy consists of direct, indirect and induced impacts. Direct impacts are the changes in the activities of the impacting industry, such as the construction and operation activities by the Kings Valley Lithium mine. The impacting business, such as the Kings Valley Lithium mine, changes its purchases of inputs as a result of the direct impact. This produces an indirect impact in the local business sectors. Both the direct and indirect impacts change the flow of dollars to the county’s households. The local households
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alter their consumption accordingly. The effect of this change in local household consumption upon businesses in a county is referred to as an induced impact.
A measure is needed that yield the effects created by an increase or decrease in economic activity. In economics, this measure is called the multiplier effect. Also beyond the scope of this paper are new economic sector linkages that will occur in Humboldt County as the electric car and lithium battery economic cluster matures in the state of Nevada.
Inter-Industry Analyses
For this paper, two analyses will be completed. One scenario will estimate the economic, employment, and labor income impacts of constructions activities by the Kings Valley Lithium
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Mine on the Humboldt County economy. The second scenario estimated the economic, employment, and labor income impacts from operations by the Kings Valley Lithium mine on the Humboldt County economy.
Construction Impacts of the Kings Valley Lithium Mine on the Humboldt County Economy
Estimates of output, employment, and labor income impacts of Kings Valley Lithium Mine construction activities on the Humboldt County economy were derived from information furnished by Western Lithium Corporation (2015). Also to derive impacts of Kings Valley
Lithium mine within the Humboldt County economy, the proportion of total expenditure, employment, and labor income that would be in Humboldt County was estimated. Using the
IMPLAN database (Minnesota IMPLAN INC., 2010), it was estimated that 62% of activity occurred within Humboldt County. These estimates of direct impacts are used to calculate total impacts for Kings Valley Lithium Mining construction activities.
For the construction phase, 371 workers who live in Humboldt County would be directly employed with Humboldt County labor income and expenditures estimated to be $66.1 million and $161.0 million, respectively. Given the multiplier impacts, the construction activities of
Kings Valley Lithium mine in Humboldt County will have total employment impacts of 720 jobs. This means that beyond the direct employment impacts of 371 jobs, the indirect and induced impacts of the construction activities of the Kings Valley Lithium mine on the Humboldt
County economy was 349 jobs. Indirect impacts are the additional jobs created between economic sectors after the initial direct employment is made. Induced impacts are the additional jobs attributable to household sector interactions.
Also for the construction phase, Humboldt County direct economic activity and labor income impacts were estimated to be $161.0 million and $66.1 million, respectively. Given the multiplier impacts, total economic and labor income impacts from construction activities by the
Kings Valley Mine in Humboldt County were estimated to be $206.7 million and $79.8 million, respectively.
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Table 3. Output, Employment, and Labor Income Impacts of Construction Activities for the Kings Valley Lithium Mine in the Humboldt County Economy.
Indirect and
CATEGORY Direct Induced Total Impacts
Output
Employment
Labor Income
$160,891,708 $45,768,851 $206,660,559
371 349 720
$66,077,784 $13,684,775 $79,762,559
*Values are estimated from IMPLAN software.
Average Annual Operations Impacts of the Kings Valley Lithium Mine on the Humboldt
County Economy
Estimates of average annual output, employment, and labor income impacts of Kings Valley
Lithium Mine operations on the Humboldt County economy were derived from a memorandum furnished by Western Lithium Corporation (2015). The life of the mine is estimated for 24 years and with average annual employment of 155 employees. These estimates of direct impacts are used to calculate total impacts for Kings Valley Lithium Mining operation activities on the
Humboldt County economy.
For the average operation activities, 155 workers would be directly employed with average annual labor income and output estimated to be $13,460,769 and $105,888,161, respectively.
Using data from IMPLAN (Minnesota IMPLAN Group, Inc., 2010), approximately 77% of activity would occur in Humboldt County. Therefore the direct impacts in Humboldt County were estimated to be 118 employees, expenditures of $80.9 million and labor income of $10.3 million. Given the multiplier impacts, average annual activities of Kings Valley Lithium mine in
Humboldt County will have total average annual employment impacts of 189 jobs. This means that beyond the direct employment impacts of 118 jobs, the indirect and induced impacts of the
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average annual operations activities of the Kings Valley Lithium mine on the Humboldt County economy was 71 jobs. Indirect impacts are the additional jobs created between economic sectors after the initial direct employment is made. Induced impacts are the additional jobs attributable to household sector interactions.
Also for the average annual operation phase, direct economic activity and labor income impacts were estimated to be $80.9 million and $10.3 million, respectively. Given the multiplier impacts, total average annual economic and labor income impacts from operation activities by the Kings Valley Mine in Humboldt County were estimated to be $92.0 million and $13.8 million, respectively.
Table 4. Average Annual Output, Employment, and Labor Income Impacts of Operation
Activities for the Kings Valley Lithium Mine in the Humboldt County Economy.
CATEGORY Direct
Indirect and
Induced Total Impacts
Output
Employment
$80,879,836 $11,095,254 $91,975,090
118 71 189
Labor Income $10,281,648 $3,501,259 $13,782,907
* Estimate from IMPLAN software.
Conclusions and Suggested Future Study
The primary objective of this study was to derive the economic, employment, and labor income impacts of the Kings Valley Lithium mine construction and operation phase on the Humboldt
County economy. Given the current and future potential of Nevada’s new economic cluster of electric car and lithium battery manufacturing, the Kings Valley Lithium mine will become a major player in this new state economic cluster. Currently there is no employment in lithium mining in Humboldt County so the Kings Valley Lithium mine may provide Humboldt County a new economic actor which could develop new economic linkages within the county and state.
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For this study, the IMPLAN (Minnesota IMPLAN Group, Inc. 2010) microcomputer inputoutput model software was employed. To derive economic impacts of the Kings Valley Lithium mine, the Nonmetallic Metals Sector national economic vector was employed to derive economic linkages. It is likely an augmented national vector for the Nonmetallic Metals Sector would represent activities of a lithium mine in Humboldt County. For more accurate impact analysis, a study should be employed to derive economic linages directly from Kings Valley Lithium mine.
This would require a questionnaire of the Kings Valley Mining operation that would take time to complete but would offer more reliable results. However this study using the default data from the IMPLAN microcomputer input-output model software (Minnesota IMPLAN INC., 2010) has shown that the Kings Valley Lithium mine would have extensive economic linkages and impacts in Humboldt County. However what this study does not show is the extended potential impacts that would arise to Humboldt County and the state of Nevada by the Kings Valley Lithium mine’s future economic linkages in the new and yet operational electric car and lithium battery state economic cluster. These potential future impacts may be extensive and should be considered in any future impact analysis.
References
Minnesota IMPLAN Group, Inc. (MIG). 2010. Version 3.0 User’s Guide. Hudson, WI: MIG.
Available on-line at http://implan.com/ .
Nevada Department of Employment, Training and Rehabilitation: Quarterly Census of
Employment and Wages. Carson City, Nevada, 2015.
Western Lithium Corporation. Personal Communication, December 2015.
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