The Biden administration is proposing significant changes to a 151-year-old law governing mining for hard rock minerals on U.S. federal lands, including introducing royalties on extracted minerals for the first time. Led by the Interior Department, the plan also aims to establish a mine leasing system and streamline permitting processes across various federal agencies. This initiative aligns with the White House's efforts to boost domestic mineral production, particularly for clean energy technologies like electric vehicles and solar panels.

Currently, the 1872 law does not require companies to pay royalties on minerals extracted from federal lands, a longstanding concern for Democratic lawmakers and environmental organizations. The new proposal suggests implementing a variable net royalty rate of 4% to 8% on hard rock minerals extracted from federal lands. However, congressional approval is necessary for these changes, which may face opposition from Republicans who control the House of Representatives and historically oppose such fees.

Despite potential political challenges, an interagency working group, led by the Interior Department, emphasizes the advantages of introducing royalties on approximately 750 hard rock mines located primarily in the Western United States. It's worth noting that this figure excludes around 70 coal mines whose operators are already required to pay federal royalties.

“A royalty would ensure that American taxpayers receive fair compensation for minerals extracted from federal lands, ″ the working group said in a report Tuesday. The fee also could pay for programs to boost mining permits, clean up abandoned mine lands, help states and tribal governments that provide infrastructure and services to mining-dependent communities, the report said.

Unlike several other countries, including Australia, Canada, and Chile, which levy royalties on mineral extraction, the United States currently does not impose such royalties. Nevertheless, more than a dozen Western states within the U.S. have established their own systems for collecting royalties from hard rock mining operations.

“Although thoughtful concerns were raised by the mining industry regarding the existing hard rock leasing system that is used on certain federal lands,'' the working group “did not receive any arguments as to why a properly designed leasing system could not be equally successful in the United States,'' the report said.

Deputy Interior Secretary Tommy Beaudreau referred to the plan as a "modernized approach" that balances the requirements of the clean energy sector with obligations to tribal nations, taxpayers, the environment, and future generations.

“Securing a safe, sustainable supply of critical minerals will support a resilient manufacturing base for technologies at the heart of the president’s investing-in-America agenda, including batteries, electric vehicles, wind turbines and solar panels,” said Joelle Gamble, deputy director of the White House National Economic Council.

Tribes and environmental groups welcomed the report but urged President Joe Biden to go further to protect communities, sacred places, and water resources. The White House formed the working group last year as Biden pledged to boost production of lithium, nickel and other minerals used to power electric vehicles and other clean energy.

"These modest reforms are a good first step, but they’re not enough to safeguard our water and communities,” said Allison Henderson, southern Rockies director at the Center for Biological Diversity, an Arizona-based nonprofit. “The Biden administration should use its full authority to update these antiquated mining laws, prevent more mining industry devastation and preserve a livable planet for future generations.”

Rich Nolan, President and CEO of the National Mining Association, criticized the report, saying it didn't align with Biden's goal of securing domestic mineral supplies while supporting responsible mining. He expressed concerns that the proposed leasing system and high royalties could hinder responsible domestic projects, leading to increased reliance on imports from countries with questionable labor, safety, and environmental practices.

Wyoming Sen. John Barrasso, the top Republican on the Senate Energy and Natural Resources panel, accused Biden of damaging affordable and reliable energy sources. Barrasso also warned that the proposed mining reforms might result in greater dependence on critical minerals from countries like China, where forced or child labor is a concern, rather than utilizing domestic resources.

Image source: ET