Mining Taxes for Value

How Coeur Mining’s Anne Beckelheimer made the tax department a trusted partner in planning and operations

Anne Coshow Beckelheimer Coeur Mining
Anne Coshow Beckelheimer, VP of Tax, Coeur Mining

When Anne Coshow Beckelheimer joined Coeur Mining as vice president in charge of the tax function in June 2015, the company was still adjusting to its new corporate home in Chicago and a new leadership team. Having previously established its roots in Coeur d’Alene, Idaho, the ninety-year-old precious metals mining company moved its corporate headquarters to the Windy City in 2013. Two years later, Beckelheimer was offered the task of redefining the tax function.

Enticed by the challenge, Beckelheimer—who previously held tax leadership roles at two other mining companies—quickly found that she needed to not only hire tax specialists but also raise the visibility of the tax function. In the mining industry, tax matters can have a significant impact on financial results and should be considered in financial forecasting and strategic planning. Upon arrival at Coeur, Beckelheimer recognized the opportunity to optimize Coeur’s tax function.

“Tax was not viewed as a value-add partner,” Beckelheimer recalls. And that had to change, because to some extent, making key decisions—such as whether to invest in a new mine—without examining the tax implications is similar to piloting a plane through fog without radar. It can be done, but the risk substantially increases.

Consider, for example, that Coeur took in roughly $710 million in metal sales and paid $13 million in income and mining taxes in 2017. A good portion of the tax total was for payments of mining taxes—industry-specific levies that vary from state to state and country to country. It’s important to factor the cost of taxes when considering investing in a new mine and predicting the mine’s profit over its lifetime.

The first step to integrating the tax function with other parts of the business was to build a strong team of specialists. Beckelheimer assembled a team that had more to offer than just being tax savvy. “I’ve formed a team with various backgrounds and expertise,” she says. “The team is incredibly technically proficient, but also personable.” It was critical, she continues, for the new hires to engage with people in different functions throughout the company, so strong interpersonal skills were essential.

One of the first challenges for the new tax team was to demonstrate how they could contribute to planning and profitability. There were numerous opportunities, both formal (training sessions aimed at specialists in multiple departments) and informal (within the context of strategic planning sessions) to do that.

As leaders debated strategic investments such as purchasing a new mine, Beckelheimer didn’t hesitate to bring up the tax implications. She also arranged cross-functional sessions focused on various areas, “everything from opening a bank account to acquiring a new mine in British Columbia,” she says. These matters impacted the work of several disciplines on the finance and legal teams. “We really focused on cross-functional collaboration and communication, as all business functions need to be on the same page, working together.”

That outreach extends to field operations regarding the purchase of equipment. Tangible personal property used to extract minerals is subject to sales and use tax in some jurisdictions. In some cases, vendors also provide engineering and installation services, as well as charge for freight expenses. The freight, installation, and portion of services that are not necessary to complete the sale of tangible personal property may be exempt from sales taxes. In order to claim that exemption, the vendor’s invoice is required to separate the cost of services from the cost of physical goods, which vendors don’t always do.

“It comes down to structuring invoices properly,” Beckelheimer explains. “We worked with the supply chain team so that they knew how to discuss with vendors to make sure the invoices were clear so the company would qualify for sales and use tax exemptions.”

Time and persistent effort have helped the tax team make progress in being perceived as a valued partner throughout the organization. “A lot of our progress can be contributed to ongoing education—talking through the issue in different ways from different angles,” Beckelheimer says. One approach is to explain the history and intent for certain tax laws. For example, mining taxes are generally calculated differently than income tax, and as a result, generate more tax revenue, faster for the relevant government. This was especially noticeable within the past decade as various jurisdictions enacted mining taxes when gold prices were rising. In many cases, the mining tax revenue is at least partially allocated back to the local and regional governments where the mine is located. The minerals are considered natural assets of the state and/or country. “The mining tax is part of the social contract for doing business there,” she continues.

Another major aspect of the company’s social contract is to properly reclaim or clean up after a mine is closed. That, too, has important tax implications because the company can deduct the cost of land reclamation, but the company can’t write off the cost until after it spends the money on the reclamation work. That may mean the company has to wait to make the deduction.

“You may be creating a loss that you can’t use for that tax year,” Beckelheimer says. That’s a key consideration for financial forecasting, as well as tax compliance. Having an in-house tax team is certainly an asset when it comes to such issues.

Also an asset is having people familiar with the tax structure where the company’s mines are located. Today, Beckelheimer has a tax team of four, based in Chicago, that focuses on domestic and international tax. She also has a team of three, based in Mexico, who are well versed in Mexican tax matters. With a recently acquired mine ramping up in British Columbia, she envisions hiring in-house specialists in Canada who will focus on tax implications for that operation.

Another aspect of Beckelheimer’s responsibility is to explain arcane tax concepts to people in layman’s terms. Most of the individuals whom she and her team work with don’t fully understand complex tax terms and implications; therefore, Beckelheimer’s approach is to break down technical areas to their most basic concepts, tailoring discussions to her audience. She also isn’t afraid to sketch out ideas, firmly believing that a picture is worth a thousand words.

Clearly communicating complex issues and striving to be a valuable business partner will continue to be as important to her job as panning for nuggets of value among tax codes. That’s just fine with Beckelheimer, as she presses on with the overriding goal of making the tax team a key collaborator with the company’s business functions.

 

Photo: Julianne Green Photography


At EY, we are committed to building a better working world – one with increased trust and confidence in business, sustainable growth, collaboration and development of talent. We are thrilled to recognize Anne Beckelheimer for this well-deserved honor. By working with like-minded individuals such as yourself, we are able to solve the key challenges facing today’s capital markets.