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Vol. 22, No. 31 Week of July 30, 2017
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining News: Future of US mining

House minerals subcommittee looking for ideas to foster domestic mining

Shane Lasley

Mining News

U.S. House Subcommittee on Energy and Mineral Resources sought input on how to foster a more robust domestic mining sector during a July 20 hearing, “Seeking Innovative Solutions for the Future of Hardrock Mining.”

“Hardrock mining on federal land in the United States has a storied past, a challenging present and multiple needs for reform,” Subcommittee Chairman Paul Gosar, R-Arizona, said. “From rocks to roads, rare earths to green technologies, and iron ore to wind farms, all infrastructure projects rely upon a mining operation.”

While everybody at the hearing agreed that the domestic mining sector is in need of reform, there were vastly different views about what needs to be done.

Rep. Alan Lowenthal, D-California, ranking member of the subcommittee, made the case for modernizing the Mining Law of 1872, suggesting this law that allows the staking of mining claims on federal lands is outdated.

“The West has been settled,” he said.

Others that testified at the hearing, however, see streamlining mine permitting, eliminating increases to the bonding requirements being proposed by the U.S. Environmental Protection Agency, and better public data on the domestic mineral potential as ways to spur domestic mining.

“It is important that we don’t lose sight of the connection between the mining activities we carry out and what these metals are needed for,” Coeur Mining President and CEO Mitchell Krebs stated. “By eliminating the unnecessary duplication that currently takes place at multiple levels of government and by tackling the lack of coordination and communication among various regulatory agencies, we could bring certainty and a level of common sense to the process.”

More geo data

Roughly $75.6 billion worth of non-fuel minerals were produced in the United States last year, Murray Hitzman, associate director for energy and minerals, United States Geological Survey, told the committee.

While producing much of its mineral needs, Hitzman said “the U.S. is also increasingly reliant on foreign sources for processed mineral materials.”

This reliance includes being a net importer of 50 non-fuel mineral materials, valued at $32.3 billion. This includes 20 minerals for which the U.S. is 100 percent import-reliant.

Among the growing list of minerals for which the United States completely relies on foreign sources for its supply are critical and strategic minerals such as rare earth elements, manganese and niobium; and important technology minerals such as graphite and yttrium.

Hitzman said the United States is rich in many of these minerals but less than one-third of the country has been mapped and further public geophysical data is needed to spur exploration.

“The nation’s land undoubtedly contains additional deposits of critical and strategic minerals, but mineral exploration by the private sector is hampered by the lack of modern geological and geophysical data,” he told members of the subcommittee.

“For example, Alaska and large portions of the mid-continent represent some of the most prospective ground for mineral discovery in the world, however, the favorable rocks from the deposits and not visible at surface – geophysical surveys are required for such areas,” he added.

Hitzman said other mineral producing countries which have undertaken the geophysical surveys needed to provide a peek of the buried potential, such as Canada and Australia, report that a $1 governmental investment has resulted in $5 of investment by private sector companies exploring the intriguing prospects revealed.

Streamlining permitting

Once a feasible deposit has been identified and delineated in the U.S., it takes nearly a decade to gain the permits necessary to develop a mine to extract the minerals, according to SNL Metals & Mining reports referred to by the subcommittee.

In a 2015 report, SNL detailed three mines – HudBay Minerals’ Rosemont copper-gold-molybdenum mine in Arizona, Coeur Mining’s Kensington gold mine in Southeast Alaska and Antofagasta’s Twin Metals copper-nickel-platinum group metal project in northeastern Minnesota – as case studies for permit delays in the United States.

Of the three, only Kensington is currently in operation – albeit, it took nearly two decades and an arduous court battle for permit approvals.

“I was just up at our Kensington Mine in Alaska earlier this week, which I think serves as a posterchild for our country’s inefficient and unpredictable permitting process,” Coeur CEO Krebs told the committee. “It took us over 19 years; 1,000 separate studies; and, ultimately, a trip here to D.C. and the U.S. Supreme Court, to secure the 90 separate state, federal and local permits necessary to place that mine into production.”

While not every mining project will face the same challenges as Kensington, SNL found that the U. S. permitting process is unduly long.

“The sheer number of permits required and the lack of coordination among the relevant agencies results in a seven- to 10-year permit timeframe for mining projects in the U. S.,” the mining researcher wrote.

SNL found that more time does not necessarily result in stronger environmental protections.

“Like the U.S., the environmental permitting process in other developed world mining countries, such as Australia and Canada, is very stringent. These countries also require consultation with local communities and give stakeholders the right to raise objections and appeals. However, in both countries, the processes for obtaining permits are swifter than those observed in the U.S.,” the research firm wrote.

In fact, mine permitting in these countries takes about a third the time as it does in the U.S.

“In Canada and Australia, a similar process takes 2 to 3 years. In Mexico, the average time to permit a new mine is about 18 months,” Krebs said.

“By eliminating the unnecessary duplication that currently takes place at multiple levels of government and by tackling the lack of coordination and communication among the various regulatory agencies, we could bring certainty and a level of common sense to the process and save a tremendous amount of time and expense without sacrificing thoroughness or completeness,” he added.

Legislation introduced to the House and Senate by Rep. Mark Amodei and Sen. Dean Heller, both Republicans from Nevada, aim to reduce the time it takes to permit a U.S. mine to around 30 months, which would put the U.S. on par with other Western Mining countries such as Canada and Australia.

New Mining Law of 1872

Others at the hearing want to see changes made to the Mining Law of 1872, which authorizes and governs mineral prospecting and mining on federal lands.

“It is long past time to reform hardrock mining rules in this country,” said California Rep. Lowenthal.

A sentiment shared by Earthworks Policy Director Lauren Pagel.

“Meaningful reform of the outdated 1872 Mining Law is the innovative solution that will bring our mining laws and practices into the 21st century, giving the mining industry the certainty it needs, while providing a fair return to the taxpayer, maintaining community involvement in mining decisions and adequately balancing mining with other uses of public lands,” she told the subcommittee.

Gross royalties on minerals extracted from federal lands is among the reforms Earthworks is calling for.

Jim Cress, a lawyer that specializes in negotiating mining royalties, said mining companies with operations in the U.S. already pay a number of local, state and federal taxes.

“Any discussion of federal hardrock royalties should focus not only on the amount of the royalty, but on the entire tax and royalty burden applicable to mining,” he said.

The mining lawyer said the U.S. is comparable to other mining countries in terms of taxes, fees and royalties under the current system. He suggested that streamlining the permitting process should be addressed before any federal royalty is considered.

“The U.S. ranking would be higher if not for the permitting delays. So if you’re going to add a royalty, it will be a discouragement,” he said.

Stopping CERCLA bonding

Arizona Department of Environmental Quality Director Bret Parke said EPA’s proposed bonding requirements under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) would be an added financial burden that would make the U.S. less competitive as global mining jurisdiction.

Commonly referred to as Superfund, CERCLA was enacted by Congress in 1980 in response to releases or threatened releases of hazardous substances that may endanger public health or the environment.

In 2016, EPA proposed hefty CERCLA financial responsibility requirements for the hardrock mining and mineral processing industry.

Parke argued that in the nearly four decades since CERCLA was passed, states have set up financial assurance programs that surpass the issues being addressed by Congress when it passed the Superfund act.

“These mature and sophisticated state and federal regulatory programs have made the requirement to promulgate the proposed rule duplicative and unnecessary,” Parke said.

Krebs made a similar point, noting that Coeur already has roughly $200 million of bonding in place to cover the estimated cost of closure and post-closure activities at its three U.S. mines.

“Last December, EPA issued a proposed rule to require hard rock mining companies to demonstrate and maintain financial responsibility ‘consistent with the degree and duration of risk associated with their mining operations’, which sounds like a great idea. The only problem is, it already exists,” the Coeur CEO said.

If implemented, it is estimated that EPA’s proposed CERCLA financial requirements would cost the U.S. mining industry $7.1 billion.

“Mining is a global competition. Every additional regulation upon the industry to operate in the United States should be carefully considered by policymakers,” Parke advised.

Re-open Bureau of Mines

One of the innovative ideas considered at the hearing is to revisit an old idea – re-establish the U.S. Bureau of Mines.

“The U.S. Bureau of Mines was a federal entity within the Department of Interior that operated from 1910 until 1996. The purpose of the bureau was to promote the health, safety and economic viability of the mining industry. Many from the mining community have pointed to the disbandment of the USBM as the beginning of the decline of mining in the U.S,” said Committee Chair Gosar.

The Bureau of Mines is still authorized but currently unfunded.

“The U.S. is the only developed country in the world without a federal entity promoting responsible mineral development and conducting important research,” Krebs said.

The mining CEO suggested that a revamped Bureau of Mines could serve as a coordinator for the permitting process.

This could revitalize the future of U.S. mining, providing more domestic sources of the minerals increasingly needed in the modern world.

“We all may have a different view about mining, but I think it is important for people to not lose sight of the connection between the mining activities we carry out and what these metals are needed for in our society,” Krebs said.

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