President Trump Announces New Critical Minerals Order

On December 20, 2017, the President issued an executive order (EO) pressuring regulators for faster permitting of so-called ‘critical minerals’ mines. This EO cloaks the negative community impacts of mining under a shroud of national security.

Less a document over where we get our minerals, the order conceals its real purpose: limiting the rights of communities threatened by pollution from mining projects. The EO calls it permit “streamlining”.

America needs critical minerals for cell phones, flat screen TVs, renewable energy projects, and our military. The good news is the free market for these minerals allows supply to meet demand. China’s market share poses no national security threat.  Moreover, America’s mining laws and policies encourage access to public lands and royalty-free minerals. Further speeding permitting only cuts short the choices available to mining impacted communities, whose voices belong in this process.

Where Do You Want to Mine?

America is the one of the world’s best places to mine. It’s not just our minerals, it’s the strength of our democratic institutions and our uniquely permissive mining policies.

Mining is risky business. Political unrest is especially bad for the mining business. Many nations of the world burdened by the “resource curse” find themselves with lots of both minerals and corruption. That corruption creates poverty in developing nations and can lead to instability. Mining companies and investors crave regulatory certainty and tend to prefer safer destinations for their money.

In the United States, the National Environmental Policy Act (NEPA) has helped provide that stability for nearly fifty years. NEPA does not dictate an outcome, it promotes transparency that embraces community input on government decisions affecting our environment and public health. Communities, permit applicants, and government agencies have a well understood, workable, and fair process that takes into account the rights and views of mining communities. It is this regulatory certainty, provided by NEPA, that the President’s EO directly attacks.

The consulting firm Ernst and Young annually assesses the greatest business risks affecting the global mining industry. They advise clients that a commitment to transparency and a social license to operate mitigate these risks. This is the heart of community outreach during permitting. The value we place on community voices, our system of government, and attention to rule of law provide us with a global competitive advantage. Surveyed annually by Canada’s Fraser Institute, global mining industry executives agree.

Easy Access

In addition to regulatory certainty, mining companies want access to public minerals. America has among the most permissive public access laws in the world.  How permissive? If a foreign mining company wants to mine publicly owned minerals from our lands, it just needs to stake a claim, discover a locatable mineral, and file paperwork and fees ($5 per claim, then about $155 annually). Hardrock mining companies  pay no royalty to American taxpayers and enjoys generous tax breaks.

Because the 1872 Mining Law still declares mining the highest and best use of our public lands, federal land managers have no choice when it comes to balancing mining with any other potential land use. This means mining claims win over oil and gas drilling, coal mining, hunting, fishing or preservation. A 21st century mining reform law would give back to the land and mineral owners — the American public — the right to choose what to do with its lands and minerals.

What is Critical?

The EO directs Interior Secretary Zinke to come up with a list of critical minerals. The United States Geological Survey (USGS) just did. Every member of Congress with a mine in their district believes that metal is critical.  Some Members have suggested that even sand and gravel, for their use in construction materials, belongs on the critical minerals list.  This debate highlights how easily policymakers confuse criticality with importance.  Sure, we need gravel for roads, but unless we find the only suitable gravel on North Korean beaches, it is not critical.

Almost as important as which minerals make the list, is how much of the mineral a deposit needs to get the streamlined permit.  While the United States has a reach endowment of critical minerals on the USGS list, few appear in isolated economically recoverable deposits. Thus, agencies will need to decide whether a few atoms of yttrium in a proposed gold mine will satisfy the threshold for permit streamlining. These criticality determinations and questions of how much you need are controversial; so Secretary Zinke should open this process to public comment.

Who’s Afraid of China?

The mining industry claims it takes them between 7-10 years to get a permit.  This is demonstrably untrue. In 2016, the Government Accountability Office reported that the Federal Government takes, on average, two years to permit a hardrock mine. This is competitive with Australia, Canada, Chile, Norway and other modern democracies with robust mining industries.

When China attempted to corner the market on critical minerals in 2010, markets and the international community responded precisely how they should. Savvy investors provided capital for new critical minerals projects. The Mountain Pass molybdenum mine in California re-opened for business. Australia opened the Mount Weld mine. Critical mineral manufacturers diversified their supply chains, researched alternatives, and increased recycling.

In 2012, the United States, European Union, Brazil, Russia, India, Indonesia, Japan and other nations complained to the World Trade Organization (WTO). In 2014, we won. China dropped their tariffs, commodity prices plummeted, supply met demand, and the right blend of free market innovation and fair trade justice prevailed.

If You Can’t Beat ‘em, Buy ‘em

Alarmism over China choking off our critical mineral supply relies on the premise that if we mine domestically, the minerals will stay here. China’s lifting of trade restrictions tanked prices and caused Mountain Pass to go belly up.  Then, in June 2017, a Chinese firm bought the bankrupt mine. In fact, foreign mining companies own many mineral claims across the West.

Supply chains, refining and product manufacturing occur globally.  A number of friendly countries like Australia, Chile, Canada, and India have supply and refining capacity.  In the real world, demand for the products manufactured from critical minerals will drive critical minerals supply.

Conservation. Recycling. Substitution.

Better though, if we don’t have to mine it at all. The United States has a strategic reserve already. The Department of Energy leads a Critical Materials Institute with a $120 million budget to research alternatives, reduce waste, and diversify production.  If we need more, we can find some in our own tailings piles.  In Japan, Honda expects to recover 80 percent of rare-earth metals contained in some of their used nickel-metal-hydride car batteries. In Germany, Siemens is researching recycling rare earths from electric vehicle motors.

Fomenting security concerns over a years-old trade dispute, does not make a crisis. The President is wrong to direct our government to reduce community input in their mining decisions. We need reform of our mining laws and protections, not elimination of community and environmental safeguards from a regulatory regime that is already one of the most permissive in the world.


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