President Biden’s energy transition plan needs critical minerals to produce electric vehicles and their batteries, wind turbines and solar panels. Yet, some Congressional Democrats want to change the nation’s primary mining law, the General Mining Act of 1872, to make it more costly to mine for these metals in the United States. House Natural Resources Chair Raúl Grijalva and Senator Martin Heinrich introduced two bills, both titled the “Clean Energy Minerals Reform Act,” that would fundamentally alter how U.S. mining companies are able to produce minerals on federal lands. Currently, the United States is reliant on other countries to supply certain metals—like graphite and cobalt—which are significant to national security under an America dependent on wind mills and solar farms for electricity and electric vehicles for transportation. China controls 80 percent of the processing of these critical minerals. These two bills, however, do not make it easier to mine or process these metals in the United States; they make it costlier, which will only make energy more expensive for Americans while driving mining investments abroad.
The Two Proposals
Grijalva’s version of the “Clean Energy Minerals Reform Act” would establish a federal leasing system for mining, analogous to the program for oil, gas and coal companies that want to produce energy on public lands. Grijalva’s bill would establish a 12.5 percent royalty rate on new mining operations and an 8 percent royalty rate on existing mines. Currently, these mines operating on federal lands do not pay royalties to the government for locatable minerals. The bill would also set “strong environmental standards” under the mining law “for mining activities and long-term reclamation” of closed or abandoned mines and require the government to consult with Indigenous tribes prior to “permitting mining activities that will impact tribal communities.”
The Heinrich version would require mining companies to pay a rate “not less than 5 percent and not greater than 8 percent based on the gross income” of mining production on federal land. The rate, however, “would not apply to mining operations already in commercial production or those with an approved plan of operations.” Heinrich’s bill would also require “annual rent payments” for mineral claims on federal lands. The Heinrich proposed bill is co-sponsored by 6 other Democratic senators.
Background
After announcing last year that he wanted to import these critical metals, President Biden recently announced that he wanted a stronger domestic mining industry to produce metals needed for renewable energy technologies and electric vehicles, invoking the Korean War-era Defense Production Act. The act allows Defense Department funding for some early-stage mine development activities. Biden singled out five metals sought by manufacturers of zero-carbon energy products as a priority: lithium, cobalt, nickel, graphite and manganese.
But while Biden talks about wanting domestic production of these minerals, the actions of his administration are just the opposite. In January, the Biden administration revoked the federal leases for the Twin Metals mine in Minnesota that contains copper, nickel, cobalt, and platinum-group elements. Also in Minnesota, the PolyMet copper and nickel mine is being held up by court and regulatory action despite having undergone more than a decade of thorough, public environmental reviews.
Ioneer Ltd.’s lithium mine in Nevada, which could supply 22,000 metric tons of lithium annually—enough for about 400,000 electric cars, is being held captive by environmentalists, who claim the mine threatens Tiehm’s buckwheat, a rare flowering plant. The Trump Interior Department had refuted that, indicating that the culprit of the buckwheat was hungry squirrels. Despite the Trump administration analysis, environmentalists asked the Biden administration to list the buckwheat as an endangered species, and Biden regulators subsequently proposed a listing to that effect, placing the mine in limbo.
The Resolution copper mine in Oak Flat, Arizona, which can meet about 25 percent of U.S. copper demand, is currently under federal environmental review. In September 2021, the House Natural Resources committee voted to include language in the reconciliation package to block the building of the Resolution copper mine. Also in Arizona, the Rosemont copper deposit received a setback when Federal regulators rejected its mining company’s request to reduce critical habitat for jaguars deemed endangered on land that overlaps the footprint of the proposed mine. The mine only needed about 6 percent of the land that had been excluded for the jaguars.
The Pebble copper and gold mine, 100 miles from Bristol Bay, Alaska had its permit application rejected in November 2020 by the U.S. Army Corps of Engineers. In January 2021, the Pebble Partnership requested the Army Corps of Engineers to reverse its denial of the proposed mine’s Clean Water Act dredge and fill permit. According to Northern Dynasty Minerals, the decision is receiving new oversight and is likely to take a year or longer. However, Biden’s Environmental Protection Agency indicated that, depending on the outcome in the courts, it would reopen a proposed veto of the Pebble mine, which, if finalized, would effectively block its development on state-owned lands. That process, started under the Obama administration, culminated in a proposed veto of the mine in 2015, before Pebble had even filed a permit application with the Army Corps of Engineers.
Recently, regulators suspended a right-of-way for a road in Alaska, previously granted by the Trump administration, which provided access to one of the world’s largest mineral deposits including zinc and copper. On March 11, the Bureau of Land Management (BLM) notified the Alaska Industrial Development and Export Authority that it suspended a previously issued 50-year right-of-way that covers 25 miles of a proposed 211-mile road connecting the Ambler Mining District to Alaska’s highway system. Biden’s BLM determined that the effects the proposed Ambler Road might have on subsistence uses were not properly evaluated and that tribes were not adequately consulted prior to issuing the right-of-way, despite seven years of such evaluations and consultations. Because BLM’s right-of-way suspension notice did not identify any specific deficiencies or corrective action plan, the development authority is clueless as to what needs to be done or how long it will take to gain access to the Ambler Mining District.
Also, in April 2022, the Department of Interior (DOI) reversed a Trump administration decision which limited the scope of compensatory mitigation the Department could force upon projects on federal land as a condition of receiving a permit, which will hit mining projects especially hard. Under the new guidance, opponents in the federal government could assess mitigation located far from the project, giving bureaucrats a blank check to request whatever they wish of a permit seeker with little controls. This decision was made less than a week after the DOI Inspector General reported that there were no controls or apparent records justifying previous versions of this program, and warned they may have to review the overall program again.
Further, a study by Finance company MSCI estimates that the majority of U.S. reserves for cobalt, lithium and nickel are located within 35 miles of Native American reservations, causing a conflict with Biden’s commitment to racial equity.
Conclusion
The United States Geological Survey (USGS) recently estimated that there were 50 minerals critical to the security of the United States. The original list of critical minerals produced by the Trump administration contained 35 elements of which the United States lacks any domestic production of 14 and is more than 50 percent import-reliant for 31. (The Biden administration expanded the list by breaking out rare earth minerals and precious group metals into separate entities and adding nickel and zinc.) The import dependence on these critical minerals is a problem because it can put supply chains and U.S. companies and mineral users at risk, particularly when China dominates the mineral supply chains, including most of the processing. Making it more difficult to mine in the United States at a time when the government is pushing green policies that increase the demand for minerals seems to be in conflict, but that seems to be a hallmark of the Biden administration.
Upending existing mining laws, as some representatives want to do, would make it more difficult to establish a domestic critical mineral mining industry. And, at a time when Americans are already reeling from high energy prices, these representatives seem to want to increase energy prices further. The proposed legislative changes would be counterproductive to establishing essential supply chains, reducing U.S. mineral import reliance and building the materials industrial base needed to accomplish the Biden administration’s objectives in transitioning the U.S. energy system to non-carbon fuels.
