The Mining Law produces vital domestic minerals. Why undermine it?

Ned Mamula and Ann Bridges | July 08, 2019 | Washington Examiner

Does America stand for self-reliance and innovative discovery of critical minerals for our economy and national defense and security? Or will Congress drive the fatal stake through the heart of our struggling domestic metals mining industry?

We shall soon find out, as two proposed mining-related “reform” bills introduced in May are winding their way through the legislative process: S.1386 (Hardrock Mining and Reclamation Act) sponsored by Sen. Tom Udall, D-N.M., and the more stringent H.R. 2579 (Hardrock Leasing and Reclamation Act) sponsored by Rep. Raul Grijalva, D-Ariz.

These bills are touted as modernizations, overhauls or replacements of the Mining Law of 1872. At first blush, overhauling the Mining Law sounds appealing and overdue. But H.R.2579 seeks to boost royalties to 12.5% on new mining operations and 8% on existing mines for the “privilege” of extracting America’s public lands mineral wealth that is so vital to our nation’s defense, computing, communication, transportation, medical, renewable energy and battery technologies.

Under current mining law, hardrock (metal) producers already pay hundreds of millions of dollars annually in the form of private state royalties, and a variety of federal and state taxes on claim fees, mining activities, products and payroll, plus an existing 2% royalty fee on minerals extracted from Federal lands based on current market value of minerals delivered to a smelter.

To better place America on a path to mineral independence, we should be reducing the overall costs of mining, not adding to them.

In addition, proposed changes to the Mining Law include an unrealistic decrease in the life of a mining claim—which is also a needless pile-on to all other production risks miners have to contend with — not to mention the length of permitting and nuisance environmental lawsuits.

Searching for “locatable” critical minerals vital to our 21st century industrialized society and living standards still requires old-fashioned capital investment for exploration and mine development — and many years to slog through the permitting process.

The two bills under consideration appear to dissuade new domestic exploration and production, including the all-important critical minerals and “green” technology metals. The increasing fees they propose could well bankrupt existing miners operating on razor-thin margins. Also, any expected “reparations” from current and future miners to reclaim mines of their unrelated predecessors would disappear with them.

Miners in the U.S. and other countries compete with massive Chinese and Russian state-owned companies that may not operate under Western environmental or human rights standards. They also compete with politically motivated price manipulations. Far too often, the global market price of a mineral drops below the routine costs of discovery, exploration, development, production, environmental protection and transport to the next business in the supply chain.

Therefore, in order to put our country on a course to achieve mineral independence, we should not penalize our mining entrepreneurs. Instead, we should incentivize them by reducing the overall costs of mining, enabling them to compete globally. We should also bring production home, by providing increased access to federal mineral lands.

Both bills would take America’s national interest in the wrong direction, even as China’s overt posturing of its rare earth monopoly bolsters its leverage against the U.S. negotiating position, which is weakened by a lack of any long-term strategic plan for domestic mining and critical minerals production.

To remain strong, our nation needs a dependable supply chain of critical minerals and metals that will only come from a durable Mining Law. The overhauls proposed in the two congressional bills would have crippling consequences that would reverberate through every sector of our economy and undermine our national security.

If passed, these bills would gut the entrepreneurial spirit of the Mining Law by imposing stricter anti-mining regulations, repressive royalties, and impossibly short lifetimes for mining claims. These changes would spell the beginning of the end for domestic hardrock exploration and mining and put thousands out of work. Worse, they would increase our already dangerous dependence on foreign sources for critical minerals.

Ned Mamula, Ph.D., is a geologist and Adjunct Scholar in Geosciences at the Cato Institute. Ann Bridges is the Silicon Valley-based author of “Rare Mettle.” Their new book is titled “Groundbreaking! America’s New Quest for Mineral Independence.