BELLE FOURCHE, S.D. — South Dakota has no tax on mining bentonite despite neighboring states generating millions of dollars from special taxes on the gray and tan clay.

Miners have been extracting bentonite from beneath South Dakota’s soil for decades, the Rapid City Journal (http://bit.ly/2tEFUhS ) reported. Now, South Dakota regulators are considering a company’s application for additional bentonite mining northwest of Belle Fourche, a city in the western part of the state.

The application from American Colloid would allow the company to re-open a previously mined, square-mile area that is projected to yield about 35,000 tons of bentonite annually for 15 years.

Bentonite is used in numerous products, from cat litter to drilling fluid. It becomes a sticky paste when wet.

Sen. Gary Cammack, R-Union Center, said he guesses bentonite doesn’t get a severance tax because South Dakota residents may think of it as a useful mud more than a lucrative commodity.

The state currently taxes the mining of gold, silver, coal, lignite, petroleum, oil, natural gas, uranium and thorium. Those taxes produced a total of about $6.3 million in revenue last year.

Revenue reports show that special taxes on bentonite generated $5.5 million in Wyoming and $1.3 million in Montana last year.

A report from the South Dakota Department of Environment and Natural Resources stated there was nearly 201,000 tons of bentonite mined in the state in 2015. If that tonnage were multiplied by the 2015 average price of $74 per ton as reported by the U.S. Geological Survey, the value of bentonite mined in the state that year would’ve been nearly $15 million.


Information from: Rapid City Journal, http://www.rapidcityjournal.com