I just came across this rather shocking S&P Global report from June 2024 that shows that U.S. mine development times are the second-slowest in the world, behind Zambia.
The study focuses on U.S. mine development times and compares them to peers, Canada, and Australia. Some of the main reasons for these long U.S. development times are litigation risk and overly stringent requirements for mines on federal lands, which host significant mineral resources in the U.S. S&P Global looked at the following themes for comparison.
Developing mines in the U.S.
is costly, time-consuming, and uncertain. Compared to Canada and Australia,
there is much more uncertainty in the U.S. about whether a mine will get built,
even after many years of developing the project and acquiring permits. This is
mainly due to litigation by environmental groups. They note that “…there are
more mentions of litigation in US properties than in Canadian and Australian
properties combined.” In the past 15 years, investor exploration spending
in Canada and Australia has been 81% and 57% higher than in the U.S.
Mineral endowments compared
to exploration investment in the metric of ‘exploration budget per US$1,000
of estimated endowment’ show that the U.S. exploration budget per
$1000 of endowment is slightly more than half (55%) that of Canada and less
than three-quarters (71%) that of Australia. This is the basic “proof” that the
U.S. is not achieving its mineral potential.
“The US’s copper endowment (reserves and resources), for
example, is comparable to those of Canada and Australia combined and sufficient
to satisfy US demand for the foreseeable future. But for several major energy
transition minerals – copper, lithium, nickel, and palladium – the US receives
significantly less in exploration budget per metric ton of endowment than
Canada or Australia.”
They also note that mining
accounts for larger shares of both GDP and employment in Canada and Australia,
which may influence faster and more certain approvals and development times.
Gold mines are the fastest to develop, and copper mines (the mineral of
electrification) are among the slowest.
Not meeting our minerals
development potential means that we are ceding market share and minerals
security to countries like China, which control a lot of mining and processing.
It makes us vulnerable to geopolitical situations, including those where
mineral monopolies are used as leverage. Many of the U.S. mineral endowments
are energy transition metals, demand for which is expected to increase in the
coming years in the U.S. and globally, though less than before, at least
through the current Trump years. Less mineral dependence means more mineral
security and fewer vulnerabilities.
Since minerals may be
produced in countries with conflicts, different environmental concerns, supply
chain risks, and shareholder concerns, those must always be considered.
They also point out that
importers of minerals must also compete with other importers of the same
minerals, which can lead to different costs.
The U.S. is beset by
stringent federal lands requirements where decisions must be sought from
multiple authorities without a single, coordinating agency. Federal
lands make up nearly half of the territory of the 11 western states where that
US endowment is concentrated. Australia and Canada have a single coordinated
agencies that handle mining permitting.
“A mine’s development is a resource-intensive
undertaking in itself. First, there is the need to prove up the resource, which
can take years and sometimes over a billion dollars. For mines on federal
lands, a detailed plan of operations must be submitted to relevant federal
agencies. If satisfied, they will issue completeness determinations (i.e. a
complete plan of operations or a complete permit application has been
submitted). This also often takes years. Then, required processes under the
National Environmental Policy Act that produce an environmental impact
statement can begin, which the government estimates takes approximately four
years. This stage can include several government agencies, including the Bureau
of Land Management, the Forest Service, the US Army Corps of Engineers and the
Fish and Wildlife Service. These agencies, whose resources are themselves often
constrained, may ask for further revisions of the environmental impact
statement, adding to total development time.”
This is kind of insane if you
think about it, and very much underscores the need for permit reform in the
U.S., particularly around NEPA and federal lands permitting. While both
political parties acknowledge the need for permit reform and have been talking
about it for about a decade, nothing really has been done aside from some
executive orders meant to speed things up. Congress needs to act on this. Both
parties have led initiatives on domestic critical minerals development, but
they have not done enough. The time from discovery to production needs to be
reduced drastically, preferably cut in half, which means roughly 12-15 years
rather than the roughly 24-30 years it currently takes.
“There is widespread recognition across the US political
spectrum that permitting has become a huge stumbling block for the development
of its mineral resources. Challenges vary depending on the jurisdiction. On
private or state lands, permitting is generally more predictable, with a
relatively clear path for approval. On federal lands, permitting is
characterized by delays, unpredictability and increasing costs. This is a major
constraint because federal lands comprise almost half of the total terrain of
the 11 mineral rich western states – and over 60% of Alaska. Moreover, the
up-front costs for hard rock mining are much greater than for other kinds of
energy projects.”
References:
Mine
development times: The US in perspective. Mohsen Bonakdarpour, Executive Director,
Frank Hoffman, Consulting Associate Director, and Keerti Rajan, Director.
S&P Global. June 2024. Copper
in the energy transition Consulting
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