Jake Daemen: Promote domestic mineral production | NevadaAppeal.com

Jake Daemen: Promote domestic mineral production

Jake Daemen
Professor Emeritus, UNR

Tesla needs lithium. Apple needs rare earth metals. HP, Intel, and Lenovo need silver and gold. Ford and GM need platinum and palladium, NV Energy needs copper. A modern society runs on minerals. The U.S. and Nevada have an outstanding mineral endowment. But government rules and regulations often interfere with the production of essential minerals.

For all the attention paid to advanced technologies, America is painfully dependent on imports for minerals and metals needed for industry, defense and consumer products. The strength and future health of the U.S. economy depend on using our nation’s vast mineral reserves.

This shift, should it continue under the General Mining Law, may have dramatic consequences for our country — but only if Congress recognizes America’s increasing need for minerals will be impossible to meet without rapid growth of mining on public lands. The National Mining Association estimates the U.S. has a minerals resource base with an estimated value of $6.2 trillion. But new mining operations are restricted or banned on more than half of all federally-owned public lands.

In 2018, the per capita consumption of minerals in the U.S. was 40,631 pounds, according to the U.S. Geological Survey. This dependence on imported minerals has more than doubled over the past two decades. International competition for minerals continues to grow. One hundred percent of 18 key minerals — and 50 percent of another 30 minerals — are imported. Imported minerals such as zinc, platinum and cobalt are critical to the defense industry and U.S. manufacturing.

Reducing minerals-import dependence and the perils of minerals shortages argue for maintaining the General Mining Laws. But some members of Congress want to change the leasing system in ways that would lead to the collapse of hard-rock mining in the United States.

Establishing a 12.5 percent royalty on new mining operations – and an 8 percent royalty on existing ones, as cosponsors of a mining bill want to do — would force companies to shift operations overseas. They would no longer be able to compete. Local and state revenue would plummet, jobs would disappear, mining communities would suffer severely. Given the severe distress already encountered in many rural parts of the country, further damaging a significant rural economic contributor would be particularly counterproductive.

In Nevada, the proposed federal royalties paid on production on all public land would rob the state of much of the revenue currently paid into state coffers.

I’m not arguing mining companies shouldn’t pay their fair share of royalties and taxes. But they already do. The U.S. mining industry pays between 40 and 50 percent of earnings in royalties, taxes and fees. Pushing royalties in the U.S. beyond the upper limit of the range in effect in other mining countries would change this. We need to tread carefully before jumping on the royalty bandwagon.

Jaak Daemen is a professor emeritus of mining engineering at the University of Nevada, Reno.