Today’s Key Takeaway: President Biden can’t have his cake and eat it too. If he wants to encourage domestic mining production, he can’t add regulations and make permitting projects more difficult.
From the Washington Examiner, Daily on Energy:
BIDEN’S MINERAL MOMENT: President Joe Biden faces a dilemma in that he wants to encourage domestic mineral production to boost renewable energy but faces environmentalist pressure to tighten regulations on the mining industry.
The issue is coming to a head because the Interior Department said yesterday it will form an interagency working group to reform U.S. hardrock mining laws, regulations, and permitting policies, all to inform a prospective rulemaking on mining.
Interior Secretary Deb Haaland said in a statement it’s time to “take a hard look at how we regulate and permit mining in this country” and to amend the Mining Law of 1872 “to reflect our current realities,” and especially to impose royalty rates on minerals extracted on federal lands.
Mining politics: The Biden administration’s priority of expanding mineral sourcing here at home has clashed with its other environmental concerns.
Interior cut off the Twin Metals mining project last month, which would have exploited what developers claim to be the world’s single largest undeveloped deposit of nickel and copper, after it determined amid pressure from environmental groups that the Trump administration wrongly renewed the project’s underlying mineral leases.
That enraged congressional Republicans, including Rep. Pete Stauber, who represents the northern Minnesota district in which the deposits are located.
But environmental groups have praised the administration’s mining strategy: “We do not need more dirty mining to achieve the clean energy transition,” Blaine Miller-McFeeley, environmental law firm Earthjustice’s senior legislative representative, said in response to Interior’s announcement yesterday.
The National Mining Association, however, said that added regulations would hurt: “The only things that will be ‘secured’ by duplicating the robust environmental and financial assurance regulations that already exist on both the federal and state levels are our import dependence and supply chain issues,” said Conor Bernstein, NMA’s VP of communications.
However they come, the minerals are needed: Interior’s announcement yesterday, and the White House’s other announcements touting domestic mineral industry developments, add to the general sense of urgency regarding shoring up mineral supply chains.
The three-month nickel contract price on the London Metal Exchange climbed to its highest level in approximately 10 years this week, per data from Rystad Energy.
Lithium prices are also on the rise, the group said, while annual demand growth for lithium iron phosphate batteries is expected to rise by about 70% in 2022.
Add higher prices for copper and polysilicon, components of photovoltaic solar cells, into the calculus, too.
All of it threatens the speed and scale of deployment of renewable energy technologies, which the U.S. and other governments in Europe seek to do at rapid scale, Rystad’s Audun Martinsen told Jeremy.
“That is of course a big headache for many developers because a lot of their future projects and economics is based on assumption that the cost for PVs and batteries will continue to drop,” said Martinsen, who is Rystad’s head of energy service research.
Mineral firms across the world are working to boost output of these minerals with global demand so strong, Martinsen said, but it can’t happen especially swiftly as with other commodities such as oil.
“A lot of these are materials that you cannot really just get to the market quickly. It takes time to get the resources mined, to get it processed, to get it transported, and further refined to the actual battery-grade lithium or solar-PV grade polysilicon,” he said. “That lead time can actually lag everything from a year to even five years for lithium.”