A new report commissioned by the National Mining Association finds that our current convoluted mine permitting process can cause a mine to lose a third of its value as it waits for the numerous permits needed to begin production. These delays, combined with other risks and costs, cut the expected value of a mine in half. This often makes minerals projects economically unviable and jeopardizes an important feedstock of the manufacturing industry while discouraging investment in the U.S.
The report, produced by SNL Metals & Mining of London, can be downloaded here.
The report begins:
“Of all the developed nations, unexpected and often unnecessary delays in obtaining mining permits afflict the U.S. most severely. Despite being blessed with a vast reserve of mineral resources, the U.S. accounts for only 7 percent of world-wide spending on mineral exploration
and production is currently reliant on a population of mature mining projects. The average remaining life of active mines in the U.S. and the share of projects in advance development have also fallen in recent years. Meanwhile, the demand for minerals to supply the defense, advanced energy, high-tech electronics, medical, and transportation industries is rising. The U.S., while leading on the manufacturing of these technologies, is lagging in the production of the minerals needed to make them.”
It also notes:
“In the U.S., the requirement for multiple permits and multiple agency involvement is the norm, as is the involvement of other stakeholders, including local indigenous groups, the general public and non-governmental organizations. As a consequence of the country’s inefficient permitting system, it takes on average seven to 10 years to secure the permits needed to commence operations in the U.S. To put that into perspective, in Canada and Australia, countries with similarly stringent environmental regulations, the average permitting period is two years.”
Three examples cited by the report are examined in detail:
The Rosemont Copper
project in Arizona continues in its attempts to secure permits, five years after the originally planned start date of 2010. Over this period, the value of the project has fallen from $18 billion to $15 billion despite much higher copper prices.
The Kensington gold mine
in Alaska was plagued by permitting issues during development. It commenced production in 2010, nearly 20 years after the originally planned start date of 1993. By the time the mine opened, the capital cost of building the mine had increased by 49 percent, and the company had reduced planned gold production by nearly a third, to focus mining operations on the most profitable part of the deposit only.
Twin Metals Minnesota
is still in a relatively early stage of the permitting process, completing a prefeasibility study in 2014. The developers have acknowledged that the delay in receiving permits, or the possibility of denial, could be a significant business risk to the project.
Another article from NMA, contains comments by Harry Moser, founder and president of the Reshoring Initiative, a program committed to bringing manufacturing back to American soil to accelerate job growth and support a stronger economy here at home.
“Every manufacturing operation in the U.S. uses minerals—either as the material that they’re producing or the tools they use to produce the material.” As the U.S. manufacturing sector grows, so does the demand for more minerals, and to keep American manufacturing growing it’s important that the U.S. has a secure, stable and reliable mineral supply in place so manufacturers can obtain the minerals they need when they need them.
“My goal is to balance the trade deficit,” Moser adds, “To bring back $500 to $600 billion dollars a year worth of manufacturing. That will increase U.S. manufacturing by 30 percent, which will require about 30 percent more minerals.”
The House Committee on Natural Resources is holding hearings on the “National Strategic Critical Minerals Production Act of 2015.” This bill aims to modernize the current U.S. mine permitting process by improving access to the trillions of dollars worth of mineral reserves, which will boost domestic manufacturing and the American economy.
It’s about time.
And, by David Briggs: