Why the U.S. Needs Mine Permitting Reform
May 23, 2023
Nearly two decades ago, the U.S. attracted almost 20 percent of t...
The U.S. is entering what could be another period of economic uncertainty driven by the COVID-19 pandemic. In August, the U.S. economy added 235,000 jobs, about one-third of what economists forecasted. Simultaneously, nearly every sector of the economy continues to face supply chain challenges forcing some retailers to place purchase limits on products or to raise prices altogether.
In this environment, reason would suggest action to rebuild our domestic supply chains and focus on job creation, however leaders in the U.S. House of Representatives are doing just the opposite. The House of Representatives’ Natural Resources Committee is proposing punitive new taxes and fees on domestic mining operations that will jeopardize the viability of American mining. If these proposals become law, U.S. mining would have one of the highest tax and royalty burdens in the world, making domestic mining projects far less attractive and likely increasing our already alarming import reliance when every effort should be made to reverse it.
To understand this threat to U.S. mining and the economy, read the breakdown on the new taxes and fees Congress is considering.
New taxes proposed: The U.S. House of Representatives is proposing three new taxes on new and existing U.S. mining projects. Policymakers have proposed an eight percent gross royalty on new mining operations and a four percent gross royalty on existing operations on U.S. federal lands. The third tax would establish a “dirt tax,” instituting a seven-cent per ton tax on dirt, rock and other materials moved during the extraction process, regardless of their value. These taxes, if enacted, would crush the competitiveness of the domestic mining industry at the very moment responsible, domestic production for everything from infrastructure reinvestment to the electric vehicle revolution is needed most.
U.S. mining’s economic contribution: This legislation ignores the fact that U.S. mining companies already pay between 40 to 50 percent of earnings in federal, state and local royalties, taxes, and other fees. By establishing a new tax and fee burden on U.S. mining – let alone one that would be among the highest in the world – domestic mining projects would immediately become far less financially viable, inevitably deepening the nation’s alarming import reliance.
The U.S. is already at a competitive disadvantage: The U.S. is struggling to keep up with other global superpowers in securing the minerals supply chains that are essential to our energy transition, infrastructure improvements and nearly every sector of our economy. The latest U.S. Geological Survey (USGS) data reveals the U.S. is 100 percent import reliant for 17 key minerals and over 50 percent reliant for another 29 minerals. China controls the lion’s share of battery metals production and processing. With mineral demands projected to increase more than 1,000 percent in the coming years, American policymakers need to revamp domestic mining rules and regulations to remain competitive with China and other global powers.
New taxes threaten our economic and national security: President Joe Biden’s Made in America agenda includes energy, infrastructure and manufacturing projects that require a wide range of minerals we currently import from China and other geopolitical rivals. This precarious situation was given prominence in the President’s 100-day review of supply chains, which acknowledged the threats to our economic and national security if this vulnerability goes unchecked.
Americans want American-sourced materials: According to recent polling conducted by Morning Consult, 84 percent of Americans believe any “Made in America” agenda, such as the administration’s effort to win the electric vehicle revolution, should use domestically sourced minerals. Raising the combined tax and fee burden the mining industry pays every year will make the electric vehicle revolution and energy transition nearly impossible.
The solution: The mining industry has publicly committed to working in a bipartisan way towards a compromise on royalties. The legislation that the U.S. Congress is currently considering is extreme and would harm thousands of American workers and businesses.
Visit our Take Action page to have your voice heard in favor of compromise and in support of American competitiveness, the mining industry and its workers.