Mineral Mining and Mineral Processing
This report provides an overview of critical minerals in the United States. Part (A) provides three trends in the critical minerals industry, with a particular focus on the supply chain. Part (B) outlines current obstacles in the U.S. mine permitting process. Part (C) provides insights on challenges facing domestic mineral processing.
Part (A): This section provides insights on trends in critical minerals in the United States, with a focus on the supply chain.
The U.S. is Seeking New Agreements with Foreign Partners
- Since the signing of a 2017 executive order to increase the supply of critical minerals to avoid a shortfall, the U.S. has met with foreign leaders to discuss new potential arrangements for trade.
- Australian Prime Minister Scott Morrison and U.S. President Donald Trump met in September 2019 and critical minerals were one of the talking points. Australia's technologically-advanced industry and safety record in the field were both mentioned.
- Australian company Lynas has a preliminary agreement to build a heavy rare earths processing plant in Texas.
- In November 2019, a new agreement was signed with Australia to authorize developing a collaborative understanding of the global critical mineral supply. The new agreement includes utilizing big data to better understand overall supply and demand.
- In January 2020, the U.S. struck a new arrangement with Canada. Canada supplies 13 of 35 minerals identified as critical. The new agreement enables a collaborative effort to increase the supply of critical minerals used in aerospace and defense and clean technology in particular.
- The U.S., Australia, and Canada now have a joint arrangement to help other countries develop their extraction of lithium, copper, and cobalt.
Formerly-Protected Areas are Opening to Mining
- As part of its 2019 push to develop a strategy to ensure the supply of critical minerals, the U.S. directed the Bureau of Land Management and the Forest Service to review all areas that were protected from mining operations to determine if the restrictions in place should be withdrawn or reduced.
- Leases were granted in Superior National Forest in 2019 to Twin Metals Minnesota, a subsidiary of Chile's Antofagasta, for the extraction of copper in the formerly-protected area. Superior National Forest attracts more visitors than any other wilderness area in the U.S., demonstrating how social impact is not a concern to developers and the current administration. (While copper is critically important, it is not listed as critical because of the high domestic supply.)
- In 2019, the Trump administration opened formerly-protected areas near the Grand Canyon to uranium mining.
- More than 2,000 square miles of previously-protected lands in California were opened to mining in 2019. The lands are now open to rare-earth prospecting.
- The Trump administration is now finalizing the opening of sections of national monuments in Utah to uranium mining.
Nonfuel Mineral Production and Processing is Increasing in the U.S.
- Overall nonfuel mineral production in the U.S. went up 3 percent from 2018 to 2019, representing an increase from $84 billion to $86.3 billion.
- The domestic production of critical rare earth concentrates is up by 8,000 metric tons (more than 44 percent) from 2018 to 2019.
- The byproduct vanadium, a critical mineral, was produced in Utah in 2019 for the first time since 2013.
- The only rare earth mine in the U.S. is owned by MP Materials and is located in California's Mountain Pass. MP Materials will begin processing its own raw rare earth for the first time in 2020 and is expected to process 5,000 tons of neodymium and praseodymium annually.
- Two additional processing operations for rare earth are expected to open in 2022.
Part (B): This section outlines obstacles in United States mine permitting.
National Environmental Policy Act Sets Pace for Permits — For Now
- The National Environmental Policy Act (NEPA) has been identified by the federal administration as the biggest obstacle to the U.S. mining industry as it necessitates environmental studies prior to permits being granted.
- Obtaining a permit in the U.S. takes approximately 10 years as a result of NEPA (according to industry-funded research), which would make the U.S. one of the slowest countries in the world for new mine development.
- The U.S. Government Accountability Office, however, that it takes an average of 2 years to obtain necessary environmental permits in a 2016 study, putting the U.S. on par with Australia and Canada for development. The report put the blame for additional delays on companies for failing to provide required information.
- The Trump administration is urging for expedited environmental studies for mining projects and has proposed that some minerals should be excluded from environmental reviews to bypass NEPA slowdowns.
- The proposed changes to the NEPA would remove the requirement for environmental studies to consider indirect effects of mining operations, including climate change.
- The proposed changes would also limit the amount of time allotted for environmental impact statements to be limited to two years.
- While public comments on the changes to the NEPA are open until March 10, the federal administration is not expected to deviate from the proposed changes.
Potential for Pollution Delays Permits
- Permitting for mines is largely decided by the amount and type of pollutants produced, rather than the social and economic effects of a mine.
- The Environmental Protection Agency has named the mining industry to be among the biggest polluters in America, having contaminated 40 percent of Western headwater streams.
- Prospective mines located near water, such as the Twin Metals mine in Minnesota, face additional scrutiny as a result of their proximity to water sources.
- PolyMet's $1 billion mining project in Minnesota has been continually delayed, in part due to PolyMet's failure to discuss potential environmental concerns.
- A July 31, 2019 ruling by U.S. District Judge James Soto against the opening of Rosemount Mine in Arizona determined that the Bureau of Land Management and the Forest Service have the ability to deny mining companies the ability of using public lands as dumps, which is anticipated to have major implications for the mining industry. The ruling is expected to be challenged in Congress.
Delays Increase Costs and Reduce Profits
- Delays associated with permitting and currently-necessary paperwork drive up the costs of projects, reducing returns and sometimes stopping them altogether.
- The potential for permitting delays make it more difficult to obtain investors for prospective projects.
- Companies that experience cost-increasing delays in the permitting process are sometimes delayed by not having a comprehensive permit application.
- The permitting and environmental review process of PolyMet cost over $200 million between 2006-2017.
- PolyMet accepted debt from equity owners to continue its project advancement after telling investors that projected cash flow would be delayed by years or more.
Part (C): This section discusses challenges facing domestic mineral processing in the United States and some potential strategies being applied.
Lack of Downstream Processing
- The United States has a lack of ability to refine and process critical minerals, thus increasing its reliance on foreign providers.
- Without domestic ability to process critical minerals, domestically-produced ores and concentrates must be exported for processing and then imported for use.
- Molycorp's first attempt at producing a $1.5 billion rare earth processing plant failed in 2015 when the company went bankrupt as a result of Chinese competition.
- A research paper in Mineral Economics advises that there are few (if any) examples of countries who have successfully increased domestic downstream processing by manipulating taxes or restrictions on unprocessed products. This indicates that it is not easy to positively manipulate this trend.
- Methods of successfully increasing downstream processing include removing constraints and bottlenecks in the economy such as by boosting labor skills, providing credit, increasing energy supply, building transport infrastructure, and removing inappropriate regulations.
All Stages of Supply Chain are Important
- Focusing on improving one part of the supply chain will cause bottlenecks further down, necessitating a joint development of each stage of production and processing to mitigate economic risk.
- Executive Order 13817 (A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals) emphasizes the need to increase activity at all levels of the supply chain, including initial exploration, developing mining operations, honing existing operations, utilizing separation processes, making alloys, and recycling.
- Creating a favorable business climate for production facilities at each stage is thus part of the federal strategy developed as a result of the executive order.
- Per the federal strategy, "transformational R&D" is now needed at all stages of the supply chain.
- To increase development at all stages, the federal strategy is outlined as follows:
- Promote public-private partnerships to incentivize U.S. private industry investment.
- Promote innovation in the development, expansion, modernization, and sustainment of domestic capabilities.
- Enhance value-added processing and associated manufacturing.
- Leverage the National Defense Stockpile program more effectively.
- Leverage additional industrial base business support programs as much as possible.
Lack of Technical Expertise and Technology Hinders Rare Earth Processing
- Processing rare earth into usable materials is difficult and requires a significant amount of technical expertise.
- Processing rare earth metals will require the development of new technologies, according to Assistant Secretary for Fossil Energy Steven Winberg.
- The Office of Fossil Energy has invested $80 million into researching the location, extraction, and processing of rare earth minerals.
- While the Office of Fossil Energy has made important successes in its rare earth research thus far, its target goal for extracting concentrates of rare earth from coal is still years away. The target date is between 2030-2035.
- The necessary development of rare earth processing projects does not have the unified support of Congress and Trump, hindering full support of developing domestic processing capabilities.