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Pitfalls Await Biden’s Bid to Boost Mineral Mining for EVs (1)

June 8, 2021, 10:01 AM; Updated: June 8, 2021, 6:26 PM

President Joe Biden’s push for more mineral mining on U.S. soil to secure supplies for his clean energy efforts faces a host of legal, political, and business obstacles that could scuttle such ambitions before they even take shape.

Biden promised during his presidential campaign to “bolster and build critical clean energy supply chains,” partly to curb U.S. dependence on imports. But U.S. automakers have since accelerated investments in electric vehicles and other clean energy technologies. Ford Motor Co. in February joined General Motors Co. and other auto makers pledging big EV investments in chasing Tesla, the lead EV producer.

On Tuesday, the White House reported that global supply chains “are at serious risk of disruption” from natural disasters and “are rife with political intervention and distortionary trade practices, including the use of forced labor.”

Any increase in domestic production must meet modern environmental standards and must include feedback from affected communities, the report concluded.

Reversing dependence on mineral imports would be a huge task. It would need to overcome high capital costs to open hard-rock mines amid threats of environmental litigation and local opposition. And, at least for now, there are affordable supplies from Canada, Mexico, South Africa, South America, and the biggest supplier, China.

“The question here is whether the administration is willing to accept what is going to be necessary in order to achieve this goal to have these secure supply chains,” particularly to ensure domestic supplies of raw materials, said Sen. Lisa Murkowski (R-Alaska), a long-time minerals mining backer. “It is going to require approval of mining projects, and that has been a challenge for us.”

Green Energy Paradox

Getting new mines open would require addressing environmental complaints over chemical-laden processing techniques and toxic byproducts. They also would have to navigate environmental justice concerns elevated by the Biden administration, particularly for tribal communities which have fought nearby mining projects.

The fact that clean energy technologies rely on mining minerals which pose their own environmental challenges “is one of the fundamental paradoxes of the green energy revolution,” said Abigail Wulf, director of critical minerals strategy for Securing America’s Future Energy, which backs more domestic minerals supply.

Environmental groups say more domestic mining should only be considered after serious efforts to recycle and reprocess valuable minerals in discarded products and to clean up still-polluting abandoned hard rock mines. They also want U.S. boundary waters and other pristine areas off-limits to mining.

But U.S. laws and regulations governing critical and rare earth minerals are outdated—including an 1872 law making it easy to stake claims for mining operations on federal lands that don’t require lease payments to compensate taxpayers.

Litigation Strategy

Biden’s infrastructure plan calls for a $16 billion mining reclamation effort to employ hundreds of thousands in union jobs and restore and reclaim abandoned hard-rock, uranium, and coal mines—typically in rural communities that his plan says suffer “from years of disinvestment.”

But mining projects can face years of delay due to litigation. Twin Metals Minnesota LLC has battled conservation groups in the courts, which are contesting Bureau of Land Management leases for a northeastern Minnesota copper-nickel-cobalt-platinum mine. Nevada’s Thacker Pass lithium mine—which was fast-tracked by the Trump administration—also has been hamstrung by legal action.

U.S. mining operations hope Biden’s focus on accelerating supply will put industry complaints of a time-consuming and litigious permitting process front and center. Environmental reviews and permits under the National Environmental Policy Act take roughly nine years to complete, said Jonathan Evans, CEO of the Vancouver-based Lithium Americas Corp. building Thacker Pass.

Evans suggests revamping the permitting process so that different sections of the review can be done simultaneously. Thacker Pass is now being targeted in litigation by multiple environmental groups, which filed for a preliminary injunction to halt operations May 27, alleging Trump’s quick permit decision violated NEPA and other environmental laws.

Biden’s push for more domestic supply won’t matter much if there aren’t fixes to help alleviate litigation and delays that routinely doom U.S. mines, said Jim Cress, an attorney with Bryan Cave Leighton Paisner, who works on U.S. and international mining projects.

He argues for putting time limits on appeals: BLM permits are first appealed internally to an Interior Department appellate body, launching a process that can take two to three years to resolve—even before appeals move to the federal courts and more years of delay, he said.

“This has been a strategy of different interest groups to exercise leverage on mining, including tribes but also environmental groups just opposed” to it, Cress said. In the years it take to resolve such litigation, a commodity price once high enough to make a mine economically viable may fall to a point where the project no longer makes sense, he said.

Limits on how long opponents have to file suit against mines could reduce litigation in some cases, said Scott Janoe, a Baker Botts attorney who chairs the firm’s environmental, safety and incident response division.

Multiple Reviews

The broad scope of environmental reviews make mining projects technically challenging but also gives opponents a broad array of openings for legal challenges, he said.

“Mining projects implicate water use and discharge, endangered species, wetlands, and a host of other resource related concerns,” Janoe said.

Mining opponents argue the operations pose complex environmental challenges that deserve detailed reviews. Global demand is soaring for minerals, as nations eye more clean energy to address climate change, the International Energy Agency said in a May report.

Electric vehicles and battery storage have overtaken consumer electronics as the largest consumer of lithium, and global mineral demand for EVs and battery storage could balloon by at least 30 times by 2040 if nations are going to take significant climate action, the agency reported.

The complex web of other requirements from the Clean Water Act to the Comprehensive Environmental Response, Compensation, and Liability Act not only creates hurdles for new mines but also for recouping valuable minerals in thousands of old mines, she said. NEPA environmental impact requirements add yet another layer of complexity.

Environmental regulation “can make it very difficult not just for mining companies,” she said “but for state and local governments that want to go back and clean up some of the land that has been operated on for years.”

Other hurdles include environmental permits, requirements for showing adequate financing and bonding, and surface management plans, Wulf said.

One way to minimize the delays would be to provide some categorical exemptions from NEPA for certain mines, such as declaring certain minerals to be in the national interest for security or clean energy, said Cress, the industry attorney.

There is at least some precedent for awarding such exemptions, he said: projects to address pest infestations are generally exempted, allowing the U.S. Forest Service to bypass certain NEPA requirements for projects.

Compromise Ahead?

Revamping the 1872 minerals law that governs hard rock mining is a top priority for Sen. Joe Manchin (D-W.Va.). Manchin, who chairs the Energy and Natural Resources Committee, wants a broad revision of regulatory requirements for mines, the claims system, potential royalties, and “reasonable permitting reforms,” he said in a statement.

The U.S. “should not be dependent on China and unfriendly nations for the mining and processing of rare earth elements and critical minerals” in cell phones, defense technologies, and clean energy, Manchin said. “We can’t bury our heads in the sand.”

The U.S. relies entirely on imports for 14 of 35 critical minerals. It’s more than 50% “import-reliant” for nearly all others, according to Interior Department data.

One hopeful sign: Senators from both parties agreed to a modest minerals package in an energy package bill, which former President Donald Trump signed into law in December. Manchin, along with nine Republicans, also backs the American Mineral Security Act (S. 1352) introduced by Murkowski in April. It offers some tweaks to accelerate minerals mining permitting and would authorize more research on minerals processing and recycling.

National Wildlife Federation President Collin O’Mara sees the outlines of a broader deal on the horizon: Biden is pushing for more domestic supply, Republicans want permitting tweaks, and a Democratic-controlled Congress backing clean energy.

A mining law overhaul could be part of a sweeping deal revising coal mining reclamation, O’Mara said, and include a hard-rock mining fee to reclaim old mineral mines similar to one Manchin wants reauthorized for coal mines.

Manchin “is dead serious about getting that 1872 reform done,” he said.

(Updates with details about White House report in third and fourth paragraphs.)

To contact the reporters on this story: Dean Scott in Washington at dscott@bloombergindustry.com; Stephen Lee in Washington at stephenlee@bloombergindustry.com

To contact the editors responsible for this story: Rebecca Baker at rbaker@bloombergindustry.com

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