Congressman Raul Grijalva is at it again with his proposed H.R. 2579 Hardrock Leasing and Reclamation Act of 2019 which would probably make future mining in America uneconomic. Among other things, the law would impose a 12.5% royalty on productions and eliminate valid mining claims after 20 years (read full text). The royalty is extremely punitive to an industry that already pays over 45 percent of its earnings to federal, state and local governments, in the form of taxes, fees, royalties and other assessments. Currently, the U.S. is 100% import-reliant for 18 minerals – 14 of which have been deemed “critical” by the departments of defense or interior.
The American Exploration & Mining Association (AEMA) notes that:
The sweeping changes in Rep. Grijalva’s legislation are unnecessary and a disaster in the making for the domestic mining industry and for America.
The fact is, hardrock mining is fundamentally different than oil, gas, and coal because it is much more difficult to find and develop hardrock mineral resources. This bill ignores these differences and seeks to force-fit royalty and leasing programs for coal, oil, and gas on hardrock mining. Without question, the Grijalva bill, if enacted, would substantially chill private-sector investment in exploring for and developing minerals on federal land and dramatically increase our already extensive reliance on foreign sources of minerals.
This bill poses a significant threat to our Nation’s economic security and to our defense, technology, manufacturing, infrastructure, and renewable energy sectors, all of which rely on minerals from mining. The country will suffer as high paying family-wage jobs are exported, and our rural communities will experience disproportionately severe economic hardships.
Geologist Ned Mamula (adjunct scholar in Geosciences at the Center for the Study of Science, Cato Institute) opines that:
Mining is a long-term investment process and, although two decades is a long time, some hardrock mines now take 10 years or more just to get approved. What company would be willing to invest hundreds of millions of dollars in a new mine only to see its mining claims suddenly revoked?
Remarkably, the timing of this “reform” is just as bad as the substance. U.S. demand for minerals is climbing steadily: for hundreds of defense, aerospace, electronic, energy, medical, computing, transportation and other applications. Yet, our dependence on China for minerals is at an all-time high and growing, despite increasingly tense diplomatic relations. (Read full article)
Matthew Kandrach, President of Consumer Action for a Strong Economy notes:
The taboo against hard-rock mining in the United States is nonsensical and should be abandoned. Instead, America should embrace a far wiser policy of ensuring greater access to minerals on our public lands, since it’s in our national and economic interest. This would help reduce our heavy dependence on foreign nations for minerals that are needed in the production of advanced weapons systems and a multitude of consumer technologies.
The current problem stems from America adhering to a highly duplicative and inefficient system of regulatory permits and oversight that governs domestic mining. Over all, the mining industry is struggling with a regulatory system that forces them to wait seven to 10 years to obtain a mining permit, in contrast to Canada and Australia where the process takes two to three years.
The permit system was set up during a very different era when the U.S. dominated the production and use of minerals. But those days are long past. China is now the world’s leading producer and exporter of minerals and metals, supplying many that are critical to U.S. manufacturing, our technology and energy sectors, and national defense. Our ongoing dependence is not only a potential vulnerability during a time of increased global tensions, but greatly limits our nation’s ability to capitalize on our mineral wealth. (Read more)