Energy transition facing a mining crossroads

Today more than ever, mining policy is an energy policy. Wind turbines, solar panels, batteries and electric vehicles are driving a growing demand for the minerals and metals that make these technologies possible.

But the supply chains needed to deploy these technologies at the speed and scale required to meet climate challenges are not keeping pace. Nowhere is this more true than in the United States.

With each new commitment and plan to accelerate the deployment of renewable energy and build the local electric automotive industry of tomorrow, we are funding a huge demand for minerals while doing little more than lip service to the construction of the industrial base needed to supply it. While the United States possesses vast mineral resources essential for a prudent energy transition – from lithium and nickel to copper and rare earths – the United States’ dependence on mineral imports has reached alarming levels, having doubled in the course of the past two decades as a share of global mining investment in the United States has steadily declined.

While we should strive to reduce barriers to domestic mining investments and develop policies to encourage production in accordance with leading environmental and labor standards, the opposite is happening. A proposal included in Congress’ reconciliation package would effectively crush the industry when it needs it most.

This bill would impose new punitive royalties and fees on production, eroding industry competitiveness and undermining any efforts to relocate production and build supply chains for the energy transition and US manufacturing demand.

U.S. mining operations already pay 40 to 50 percent of profits in federal, state, and local royalties, taxes, and fees, as in other major mineral-producing countries. This bill would push the United States well above the upper end of that range, destroying the viability of existing operations and sending a clear signal to miners to go elsewhere.

Not only would this legislation undermine efforts to rebuild the vanguard of the country’s industrial base, it would destroy the possibility of restoring thousands of family jobs in places where investment and job creation are often scarce. . The average American miner earns over $ 81,000 a year working in an industry that makes generational investments. The United States needs more mining, not less.

Just a week ago, when rolling out $ 11 billion projects in new electric vehicle (EV) and lithium-ion battery manufacturing projects, the Ford Motors chief pleaded for more mining. national. He said “we have to bring battery production here, but the supply chain has to go to the mines.” He continued, “Are we going to import lithium and mine cobalt from nation states that practice child labor and all kinds of corruption, or are we going to take mining seriously? “

He is absolutely right. The demand for minerals on our doorstep is enormous and is coming at a surprising rate. Last May, the International Energy Agency predicted that global demand for lithium could increase 40-fold by 2040, with demand for cobalt and nickel increasing at least 20-fold. Demand for copper will double and the demand for rare earth minerals will also skyrocket. The US Department of Energy now expects a fully electric future in the United States to require more than double the current global lithium production.

Just a few weeks ago, President Joe Biden signed an executive order to manufacture half of all new cars sold in 2030 VE. “The future of the automotive industry is electric. There is no going back, ”he said.

There is no going back, but there is a lot of work to be done moving forward and that work begins with American mining. Smart Energy Policy recognizes the irreplaceable role of US mining in meeting the incredible demand for minerals resulting from a prudent energy transition and an electric vehicle revolution. The United States is at a crossroads; we can embrace responsible domestic production of American miners or dismantle it with counterproductive and punitive legislation. The choice must be perfectly clear.

Katie Sweeney is Executive Vice President and Legal Counsel for the National Mining Association.

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