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  BISMARCK, N.D. (AP) - Potash mining may soon begin in North Dakota, and state lawmakers are considering how much to tax the fertilizer-making material and where the money should go.

The North Dakota Senate's Appropriations Committee reviewed a proposal Monday that would charge a 1.5 percent tax on all extracted potash, and give the first $1 million in tax revenue to the county where the mine is located. After that, the state would get 90 percent of potash tax collections.

It's a major departure from a version of the bill approved by the House in February, which set the tax at 4 percent and gave counties a much larger cut of the revenue. Both versions exempt processing facilities from paying property taxes.

Supporters of the Senate proposal said counties don't need as much potash tax revenue because, compared to oil drilling, mining potash causes less impact on roads and other county public works.

"The House was following the path of what we do with oil, but potash is so much different," said Sen. Joe Miller, R-Park River. "You're not running rigs hundreds of miles all over."

Rep. Glen Froseth, R-Kenmare, whose district includes a potential potash-mining region in northwestern North Dakota, has pushed for a higher potash tax rate and a larger share of the money for counties. Mining may take a bigger toll on the region than lawmakers realize, and leave the land in poor shape when potash reserves are exhausted, he said.

"We have a resource that's non-renewable, and that's becoming a scarce commodity," Froseth said. "It took us 500 million years to get it. I don't think we should just give it away."

Potash is a potassium-rich salt left behind when ancient oceans evaporated and is in high demand in China. Canada is the world's biggest producer of the fertilizer ingredient, and takes much of it from a geologic formation that extends into northwestern North Dakota.

In Canada the material is shallow enough to extract with standard mining, but North Dakota's potash is at greater depths, industry officials say. Extractors would need to use a method called solution mining, which involves pumping fluid into a drilled hole, dissolving the potash, and drawing it out.

Dakota Salts LLC, a unit of Sirius Exploration PLC of London, has drilled a test well in Burke County and is analyzing the results. A spokesman, Benjamin Gerber, said the company could start mining in as few as two years, though it will depend on the tests.

Supporters said the mines could reuse water recovered from oil exploration in the region, and pipelines could move the potash to processing plants. Both techniques would keep trucks off the road, they said.

Of the first $1 million in taxes that counties receive for each mine, the state would set aside 5 percent in a special fund to use for grants to counties affected by potash extraction.

"The main impact is going to happen before the tax is even generated, when you're putting in pipelines and building the processing plant," said Sen. Dwight Clark, R-Mandan. "Once you get (a mining operation) in place, it just sits there in the countryside. Other than a little pipe that comes out of the ground on top of a well, it doesn't even look bad."

Miller said charging only one tax for potash mining, and exempting processing plants from property tax, would make the process simpler. Counties will receive more from the extraction tax than they'll lose in property tax, he said.

Froseth disagreed, pointing out that other processing plants, such as those that handle natural gas, pay tax on their buildings. "I don't see why a potash plant should be any different," he said.

The Senate Appropriations Committee took no action on the measure Monday. It is HB1046.

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