Congressman Raul Grijalva’s Mining Bill Hampers US National, Economic, and Energy Security
The U.S. mining industry deserves and requires our support:
- Mining directly and indirectly employs more than 1.5 million jobs, paying almost $100 million in labor income.
- Annually, mining generates some $17 billion in federal, state, and local taxes that support direct, indirect and induced taxes of $42 billion.
- The industry pays ~45% of earnings in federal, state, and local royalties, taxes, and other fees to benefit local communities and the U.S. government.
Yet, these benefits only begin to explain why Representative Raul Grijalva’s (D-Ariz) aim to overhaul the Mining Law is a bad idea.
Simply put, Rep. Grijalva’s bill: 1) demonstrates a misunderstanding of how U.S. mining is regulated, 2) would impose punitive high royalties (12.5% gross), and 3) would crush the competitiveness of our hardrock mining industry.
And worse, all of this would be happening right at a time where we must be encouraging more domestic mining, namely to cut our alarming import dependence on natural resources that are critical to U.S. national, economic, and energy security.
Indeed, doubling over the past 20 years, soaring U.S. dependence on foreign suppliers for key minerals and metals is a clear and present danger. “Trade War With China Exposes U.S. Mineral Import Problem.”
Take “Rare Earths,” for instance, with their unique “dual-use” attributes (i.e., commercial and military).
Not only are these resources essential to defending the country, used in laser-guidance systems for weapons, anti-missile defense, and jet-fighter engines, but they are also required for emerging energy technologies, such as systems to improve efficiency and the batteries needed for electric cars.
As the ultimate triple whammy, Rep. Grijalva’s bill would dangerously serve to extend our overdependence on foreign suppliers, while also sinking mining employment and slashing much-needed tax revenues for states.
Pushing U.S. mining companies to pay higher federal royalties would erode our ability to produce here at home and push us even further into a precarious global market, now largely in the hands of adversaries, despots, and/or miners that immorally use child labor.
Additionally, there is increasingly fierce competition for these resources since they are becoming more essential throughout the global economy.
For the energy sector in particular, there is a worldwide race to acquire them.
We need not look far to see how quickly we can utilize vast U.S. resources to revolutionize our own production lines. The U.S. shale oil and gas boom has transformed energy markets here in the U.S. and around the world.
We simply must capitalize on our mineral base with a value of $6.2 trillion.
Importantly, since most of this treasure trove resides on federal lands, mostly in the western half of the U.S., sound national policy for more mineral and metal development therefore becomes even more critical.
The fact is that U.S. mining is already one of the world’s most heavily-regulated industries. To illustrate, on top of stringent oversight at the state and local levels, there are nearly 40 federal environmental laws and regulations that govern U.S. mining.
We have one of the most cumbersome and complicated permitting processes for mining in the world. Inexplicably, it can take a decade or even longer for a company to receive a permit to open a new mine in the U.S.
In contrast, competitors such as Australia and Canada, who have just as strong environmental safeguards as we do, mining permits can be acquired in just a few years – giving them a distinct competitive advantage over us.
Unfortunately, new mining operations are either restricted or banned on over half of U.S. lands. Higher royalties and over regulation are antithetical to our goals.
Increasingly so, the health of U.S. national, economic, and energy security depends on a thriving domestic mining industry.
If we do not stand with our miners, we are assured to benefit the riskier foreign producers that we will be forced to rely on even more for supply.
Jude Clemente is the Editor at RealClearEnergy.