Now, more than ever, mining policy is energy policy. Wind turbines, solar panels, batteries, and electric vehicles (EVs) are driving soaring 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 take on climate challenges aren’t keeping up. Nowhere is this truer than the United States.
With each new pledge and plan to accelerate renewable energy deployment and build the homegrown electric auto industry of tomorrow, we are financing enormous mineral demand while doing little more than paying lip service to building the industrial base needed to supply it. While the U.S. possesses vast mineral resources essential to a careful energy transition — everything from lithium and nickel to copper and rare earths — U.S. mineral import reliance has reached alarming levels, having doubled in the past two decades as the share of global mining investment in the U.S. has steadily declined.
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When we should be working to lower barriers to domestic mining investment and shape policy to encourage production under world-leading environmental and labor standards, just the opposite is happening. A proposal included in the Reconciliation package working its way through Congress would effectively crush the industry when it’s needed most.
This proposed legislation would impose punitive new royalties and fees on production, eroding the competitiveness of the industry and undercutting any effort to re-shore production and build the supply chains the energy transition and American manufacturing demand.
U.S. mining operations already pay between 40 to 50 percent of earnings in federal, state, and local royalties, taxes and fees, similar to other major mineral-producing countries. This proposed legislation would push the U.S. well above the upper limit of that range, destroying the viability of existing operations and sending a clear signal for miners to go elsewhere.
Not only would this legislation undercut efforts to rebuild the front end of the nation’s industrial base, but it would destroy the opportunity to re-shore thousands of family-supporting jobs in places where investment and job creation is often scarce. The average U.S. miner earns more than $81,000 per year working in an industry that makes generational investments. The United States needs more mining, not less.
Just a week ago, when rolling out plans for $11 billion in new EV and lithium-ion battery manufacturing projects, the head of Ford Motors made a plea for more domestic mining. He said that “we have to bring battery production here, but the supply chain has to go all the way to the mines.” He continued, “are we going to import lithium and pull cobalt from nation-states that have child labor and all sorts of corruption, or are we going to get serious about mining?”
He’s absolutely right. The mineral demand on our doorstep is enormous and coming at startling speed. This May, the International Energy Agency projected that global lithium demand could soar 40 times by 2040 with cobalt and nickel demand jumping at least 20-fold. Copper demand will double and rare earth mineral demand will soar as well. The U.S. Department of Energy now expects that an all-EV future in the U.S. could require more than double current global lithium production.
Just a few weeks ago, President Biden signed an executive order to make half of all new cars sold in 2030 EVs. “The future of the auto industry is electric. There’s no turning back,” he said.
There is no turning back, but there is a great deal of work that needs to be done to move forward and that work begins with U.S. mining. Smart energy policy recognizes the irreplaceable role of U.S. mining in meeting the incredible mineral demand coming from a careful energy transition and EV revolution. The U.S. is at a crossroads; we can embrace responsible, domestic production by American miners or dismantle it with counterproductive, punitive legislation. The choice should be abundantly clear.