Mineral Mining and Mineral Processing

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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to review all areas that were protected from mining operations to determine if the restrictions in place should be withdrawn or reduced.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.
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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

  • 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.
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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:

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.
Sources
Sources

Quotes
  • "President Donald Trump signed an executive order to reduce dependency of critical minerals used in everything from batteries to phones."
Quotes
  • "“This has opened a new opportunity for Australian companies to supply a growing U.S. specialist manufacturing industry with the required raw or semi-processed materials.” U.S. President Donald Trump and Australian Prime Minister Scott Morrison were due to meet earlier this month to discuss details of an agreement on rare earth supply, according to a senior administration official."
Quotes
  • "But that, critical metals, space — these are the things we’re going to be talking about because Australia has a wonderful partnership with the United States, not just militarily and not just strategically, but also economically. And that’s going to be a big part of this conversation we have today."
Quotes
  • "The collaboration is aimed at advancing the countries’ mutual interest in obtaining supply chains for the critical minerals needed for aerospace and defence, clean technology and other manufacturing sectors. Supplying 13 of the 35 minerals that the US has identified as critical, Canada is the largest provider of potash, indium, aluminium and tellurium to the US."
Quotes
  • "The announcement comes as Australia’s Prime Minister Scott Morrison visits the United States this week, and builds on an initial agreement signed a year ago. Australian rare earths developer Northern Minerals will be part of the country’s delegation to Washington, it said in a stock exchange filing on Tuesday. The research agreement will focus on mapping potential critical mineral resources and prioritise developing big data to understand supply and demand scenarios for developing the critical minerals pipeline, the statement said."
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  • "Currently, the United States lacks domestic processing and manufacturing capabilities for some critical minerals, which results in the export of domestically produced ores and concentrates for further processing into more value-added products. "
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  • "It said the BLM and Forest Service should review all areas that are currently “withdrawn” – or protected - from development and assess whether those restrictions should be lifted or reduced to allow for critical mineral development."
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  • "President Trump yesterday took his biggest step yet to fix priority No. 1 for the mining industry."
Quotes
  • "The length of time it took the agencies to approve the mine plans ranged from about 1 month to over 11 years, and averaged approximately 2 years. Of the 68 approved mine plans, 13 had not begun operations as of November 2015. Agency officials attribute this to difficulties mine operators may face, such as obtaining other required federal and state permits."
Quotes
  • "If adopted, environmental impact studies under NEPA will no longer be required to study the indirect effects of a project—in other words, how a project would add to a larger problem, such as climate change—but rather, be limited to the reasonably foreseeable direct impact of a project."
Quotes
  • "CEQ requests public comment on the NPRM. Comments should be submitted on or before March 10, 2020."
Quotes
  • "That is: The decision to issue a permit is based on things like the amount of specific pollutants a mine will discharge, and whether that level is allowable under the law. It’s about meeting state standards, following state guidelines — but not about making a value judgment about the mine."
Quotes
  • "The department’s Bureau of Land Management granted the hardrock mineral leases inside the Superior National Forest to Twin Metals Minnesota LLC, a subsidiary of Chile’s Antofagasta, with the aim of expanding domestic mining of “critical minerals” used in common appliances and products, saying it is beneficial to national security because it reduces foreign imports."
Quotes
  • "The U.S. currently relies completely on imports to supply its demand for 14 critical minerals, including uranium. President Trump in 2017 directed federal agencies through an executive order to determine how to reduce the likelihood of critical mineral supply disruptions, a point echoed in the latest report."
Quotes
  • "Zinke's Interior Department said this week it would allow mining on 1.3 million acres, or more than 2,000 square miles, across the California desert, reversing an Obama-era effort to protect those lands. Vast swaths of Utah's Bears Ears and Grand Staircase-Escalante national monuments were similarly opened to mining this month, following President Trump's decision to dramatically reduce the size of those monuments."
Quotes
  • "What exempted copper from the list, however, is not that it is at all inessential as a resource, but that there is a “very low risk of disruption of supply,” says Steven Fortier, director of the USGS National Minerals Information Center, who led the effort to create the list. “The U.S. is a large domestic producer. We don’t import any copper ore, and we import about a third of our metal … we have a fairly robust domestic industry,” he says."
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  • "Plans finalized on Thursday for two national monuments in Utah downsized by Donald Trump would ensure that lands previously off-limits to energy development will be open to mining and drilling."
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  • "In 2019, the estimated total value of nonfuel mineral production in the United States was $86.3 billion, an increase of 3% from the upwardly revised total of $84.0 billion in 2018."
Quotes
  • " The Executive Order establishes as Federal policy the need to identify new sources of critical minerals; increase activity at all levels of the supply chain, including exploration, mining, concentration, separation, alloying, recycling, and reprocessing critical minerals; ensure that our miners and producers have electronic access to the most advanced topographic, geologic, and geophysical data within U.S. territory; and streamline leasing and permitting processes to expedite exploration, production, processing, reprocessing, recycling, and domestic refining of critical minerals."
Quotes
  • "The United States will team up with Canada and Australia to help countries around the world develop their reserves of minerals like lithium, copper and cobalt, the State Department said on Tuesday, part of a multi-pronged strategy to reduce global reliance on China for materials crucial to high-tech industries."
Quotes
  • "And for now, it sends its ore to China to be processed. MP Materials say they will kick-start their own processing operation by the end of 2020 and produce about 5,000 tonnes of two popular types of rare earths annually: Neodymium (Nd) and Praseodymium (Pr). In 2008 remaining reserves (using a 5% cut-off grade) were estimated to exceed 20 million tons of ore that averages 8.9% rare-earth oxides. Another two processing operations in the US are expected to open in mid 2022."
Quotes
  • "But the court found that the DNR had made an error by not holding "contested case hearings" on the permits to discuss potential environmental concerns, with objections having been raised by the Fond du Lac Band of Lake Superior Chippewa and several environmental groups including the Friends of the Boundary Waters."
Quotes
  • "Soto’s ruling effectively holds that the feds cannot say “yes” to a proposal to dump mine tailings on invalid mining claims, said Mark Squillace, a University of Colorado law professor. Mining claims can only be used to extract the minerals located there, he said."
Quotes
  • "Delays cost investors money, cutting or deferring returns substantially or even killing projects entirely. Korey Christensen, a senior associate with Hogan Lovells who works with clients in the resource sector, said cash can be flighty in those circumstances. With the prospect of a longer permitting timeline, investors may avoid the U.S. or parts of it and instead fund projects abroad."
Quotes
  • "PolyMet officials say the company has spent more than $200 million on that environmental review and permitting process since 2006."
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  • "It is concluded that there are few if any examples of successful use of taxes or restrictions on unprocessed products to promote downstream processing."
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  • "It did not, however, complete the downstream processing needed to produce purified rare earth materials before the company went bankrupt in 2015 because of Chinese competition. The mine's new owner, MP Materials, plans to reactivate and complete the mothballed facility for fresh operation starting in 2020."
Quotes
  • "All stages of the critical mineral supply chain are important and can impact one another. For example, increasing the rate of mining without increasing corresponding processing and manufacturing capabilities will simply move the source of economic and national security risk further down the supply chain and create dependence on foreign sources for these capabilities. "
Quotes
  • "So, we know the resources are there. The challenge, of course, is that extracting, separating, and processing them is difficult, and new technologies are needed to help us take advantage of this tremendous potential. "
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  • "That is largely due to China’s domination in processing. Efforts to build rare earth processing plants in the United States are still in the early stages and lack unified support from Congress and the administration of U.S. President Donald Trump."