Critical Minerals: What’s On & What’s Next

 Recent Developments

Chilean Congressional Committee approved mining royalty bill: On January 4, the Chilean Senate Mining and Energy Committee approved a mining royalty bill to increase royalties on copper sales throughout the country. The bill will now be considered by the Treasury commission, and if passed, it will head to a final vote. This proposal has been heavily criticized by the mining industry, as Chile is the world’s largest producer of copper. Notably, there were disagreements surrounding the tax rate formula used in the proposal, resulting in the government modifying the bill in October to use a fixed sales royalty of 1% for large miners while removing the royalties on copper payment prices. However, many in the mining industry maintain the tax burden is too high.

Rice University report suggests the U.S. should reduce Chinese dependency on rare earths: A recent report from Rice University’s Baker Institute for Public Policy has concluded that the U.S. and allied countries should begin to onshore and develop less risky raw materials supply chains to reduce dependence on rare earth minerals from China given their strategic importance for defense and non-defense applications like alternative energy technologies. The report outlines that if this global advantage was ever exploited by China like Russia’s Gazprom did in the first half of 2022 after Russia invaded Ukraine, the U.S. “must minimize China’s ability to limit sanctions and other collective global responses against potential coercive action.” The report concludes by noting that U.S. government officials are under pressure to take steps that address short- and medium-term supply risks from disruptions in the supply from China while also taking a long-term approach to developing a domestic rare earths supply chain.

U.S. Department of the Treasury releases new information on the U.S. Inflation Reduction Act’s clean vehicle tax credits: The Department of the Treasury released additional information on the anticipated direction of certain clean vehicle provisions in the Inflation Reduction Act (IRA) on December 29, 2022, after it delayed its proposed guidance on key tax provisions of the bill on December 19, 2022, until March. The additional information included a white paper on the expected direction of the March proposed guidance, such as proposed definitions for critical minerals and battery component requirements, including what constitutes a Free Trade Agreement (FTA). Notably, the Department stated that an FTA is not defined in the IRA or other statutes, and therefore, it will seek comment on what constitutes an FTA, which could ultimately help more companies qualify for the credit. Additionally, the Department outlined a three-step process for “determining the percentage of the value of the critical minerals in a battery that goes toward meeting the critical mineral requirement” and a four-step process for “determining the percentage of the value of battery components that goes toward meeting the battery component requirement.” Lastly, it released a notice of intent to propose regulations on the tax credit for new clean vehicles and a notice on the “incremental cost” of vehicles eligible for the commercial clean vehicle credit, allowing leased vehicles to qualify for the credit, which the European Union applauded as a “win-win for both sides,” but noted that it is still seeking “similar, non-discriminatory treatment of EU clean vehicle producers under the Clean Vehicle Credits.”

• In response, Sen. Joe Manchin (D-WV) urged the Department of the Treasury to pause its implementation of the commercial vehicle and new vehicle tax credits “until they are able to issue guidance in line with the intent of the Inflation Reduction Act.” He noted that the information “bends to the desires of the companies looking for loopholes and is clearly inconsistent with the intent of the law. It only serves to weaken our ability to become a more energy secure nation” and that he will introduce new legislation that “clarifies the original intent of the law and prevents this dangerous interpretation from Treasury from moving forward.”
• The Department of the Treasury “will issue a notice of proposed rulemaking (NPRM) in March with proposed guidance on the critical minerals and battery components requirements. By statute, the critical mineral and battery component requirements take effect only after Treasury issues that proposed rule.”

Namibia halts Russian uranium exploration in-country. Namibia’s Ministry of Agriculture, Water, and Land Reform stopped Russia’s atomic energy agency’s subsidiary, One Uranium, from exploring uranium opportunities in Namibia over environmental concerns. Despite giving Rosatom exploration rights in 2019, One Uranium still required a water use permit to start mining. However, Namibia’s Minister for Agriculture, Water, and Land Reform, Calle Schlettwein, said, “the company did not conform to the conditions and we have now suspicion that the mining operation, which is called in situ leaching … mining, in fact, I see there is risk to the aquifer by polluting it.”

• Despite this, One Uranium’s spokesperson, Riaan Van Rooyen, said that the method was used in Kazakhstan without harming the environment and that the decision was “because it is a fairly new way in Africa, there is no such mine. It is the fear of the unknown that is mostly of concern for the local farmers.”

Japan includes rare earth in its latest National Security Strategy: Japan announced it will “secure stable supply for critical goods including rare earth(s)” in order to promote its economic security and achieve autonomous economic prosperity in its December 2022 National Security Strategy. The strategy notes that “Japan will reinforce its mechanisms for promoting economic security policies, and work with its ally and like-minded countries, as well as in cooperation with the private sector…” and that it will “consistently consider and revisit these measures, and in particular, continuously assess the risks that exist in each industry, and implement other necessary security measures in a whole-of-government manner.” This development follows Japan forming a new Critical Minerals Partnership with Australia in October 2022 to secure a supply of critical minerals needed for clean energy technologies.

• Additionally, Japan designated 11 areas of “specified critical materials,” including rare earths, on December 20 under the Act on Promotion of Economic Security by Integrated Implementation of Economic Measures enacted on May 11, 2022.
• Japan also plans to begin deep sea mining at a depth of 6,000 meters off the Minami-Torishima Island, which is roughly 1,900 kilometers southeast of Tokyo. Japan will start developing the technologies needed to extract minerals at that depth. The Japanese Diet approved roughly $44 million for the project in its second supplementary budget for fiscal 2022.

Canada releases new vehicle emission standards: Canada published new proposed regulations that requires zero-emission vehicle sales to be 20% by 2026, 60% by 2030, and 100% by 2035. of 2021, roughly 5.6% of new cars sold in Canada were zero-emission, compared to 19% in the UK and 16% in China. In 2022, one in five cars sold in British Columbia was electric, while in Ontario, it was one in 13. In addition to the new sale requirements, the proposed regulations create rebates and funding for charging stations, aiming to support the zero-emission vehicle industry. The regulations aim to invest in 50,000 more EV charging stations, totaling 85,000 federally funded stations by 2027, as well as offer CA$5,000 for individuals and CA$10,000 for businesses to purchase EVs. Additionally, automakers selling vehicles in Quebec or British Columbia will be fined if they don’t have enough zero-emission vehicles available for sale.

• The proposed regulations aim to bring down costs and address issues seen in Atlantic Canada, where individuals receive the highest provincial rebates but often struggle to find zero-emission vehicles available.
• Comments are open on the proposed regulations for 75 days, and the final regulations are expected to be published this year.

 Looking Ahead

• Saudi Arabia’s Ministry of Industry and Mineral Resources is hosting the 2023 Future Minerals Forum in Riyadh, Saudi Arabia, on January 10-12: The event will focus on the global outlook and future of mining, regionally and worldwide, the sector’s critical role in the energy transition, contributions of mining to the development of societies, as well as mining opportunities in the Kingdom of Saudi Arabia and the wider region that stretches from Africa to Western and Central Asia.
• Mexico Business Events is hosting Mexico Mining Forum 2023 in Mexico City, Mexico, on February 1-3: The event will provide in-depth information about the Mexican mining industry, government priorities, and sustainable mining management.
• Hyve are hosting Mining Indaba in Cape Town, South Africa, on February 6-9: The event joins investors, financiers, operators, suppliers, and mining & exploration companies for four days of unrivaled deal-making opportunities, industry-leading discussions, and business-changing connections.
• Australia’s Mining Monthly and Mining Magazine is hosting Future of Mining Sydney in Sydney, Australia, on February 20-21: This event will provide opportunities to learn from, challenge and debate with the region’s pioneering innovators to address new solutions and shape strategies that advance the mining industry’s operational goals.
• Beacon Events is hosting Mines and Money Miami in Miami, Florida, on February 23-24: The event will look at key global trends, collaboration strategies, and the pathway toward the energy transition.
• Expogroup is hosting Minexpo Africa 2023 in Dar-es-Salaam, Tanzania, on February 23-25: The event will showcase the region’s latest technology in the mining & processing of minerals, earthmoving, safety equipment, and much more.
• The Society for Mining, Metallurgy, and Exploration (SME) is hosting MINEXCHANGE 2023 SME Annual Conference & Expo in Denver, Colorado, on February 26 – March 1: The event will focus on new safety strategies, exiting advances in AI, and important initiatives for a sustainable future.
• The Prospectors & Developers Association of Canada is hosting PDAC in Toronto, Canada, on March 5-8: This event will attract up to 30,000 attendees from over 130+ countries to participate in educational programming, networking events, and outstanding business opportunities in the mining industry.
• The Association of Equipment Manufactures is hosting CONEXPO-CON/AGG in Las Vegas, Nevada, on March 14-18: This event is North America’s largest construction trade show where 1,800 equipment manufacturers meet to learn, talk, compare, and see the technology and equipment that’s going to transform your business.
• The Swiss Mining Institute is hosting a conference in Zurich, Switzerland, on March 21-22: This invite-only event of selected asset managers, fund managers, and other professional investors from all over the world will provide top quality, independent perspectives from experts within the resources sector together with presentations from 80 selected mining companies.
• Solar Media is hosting Energy Storage USA 2023 in Austin, Texas, on March 28-29: This event will provide the perfect platform to connect key industry players across the entire value chain in a buzzing US market.

 In Case you Missed It

• Financial Times: Chinese battery makers strengthen grip on global supply
• Mining Technology: Iran plans $15bn investment to boost copper production
• electrek: Tesla signs a new agreement to secure lithium supply
• Forbes: Saudi Arabia Looks To Mining As Way To Diversify Its Economy
• Nuclear Engineering International: Indonesia adopts regulation on uranium mining and prepares for possible NPP
• Pass Blue: Opposition Grows Among Countries as Seabed-Mining Efforts Push Ahead
• Valdosta Daily Times: lawmaker opposes Okefenokee Swamp mining
• KITCO: Global lithium production expected to nearly double by 2025, but risks of persistent supply shortages remain
• Brookings Institution: Could Africa replace China as the world’s source of rare earth elements?
• Arab News: Saudi Arabia sees 81% increase in mining licenses awarded: Official data
• Financial Times: World’s biggest lithium producer bets on prices staying high despite supply rush
• The West Australian: Business gears up for fight over environmental protection law changes
• Bloomberg: Lithium Miner Sees 25% Price Drop in Boon for EV Industry
• S&P Global: Africa’s Growing Graphite Mining Potential
• Financial Post: No room for geopolitics in energy transition, says Sigma Lithium CEO
• Reuters: East-West battleground will shift from fossil fuels to metals
• NASA: Racing to Mine Lithium

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