Mark J. Perry is a professor of economics at the Flint campus of the University of Michigan and a resident scholar at The American Enterprise Institute.
America’s growing reliance on other countries for strategically important minerals is not much of an issue in this election year. It seems not to be on voters’ minds, but it really ought to be.
U.S. mining policy has become increasingly inept — thoughtless and heedless of consequences. The U.S. has one of the most complex mine-permitting systems in the world, marked by delays and redundancies. Obtaining a mining permit typically takes seven to 10 years, five times longer than in Canada or Australia. Companies seeking to open a new mine sometimes must deal with 10 or more federal and state agencies.
Worse, the Environmental Protection Agency claims it can revoke a mining permit already granted, raising regulatory uncertainty to an entirely new level. This isn’t smart or sustainable. How can mining companies invest in the United States if a project can be arbitrarily stopped at any time?
Amazingly, the federal government restricts — or has an outright ban — on new mining operations on more than half of all federally owned public lands. Why should Americans care about the supply of mineral resources?
Well, for one thing, we import $119 billion in minerals annually. If we continue to neglect domestic mining, manufacturers will become more vulnerable to supply disruptions and sudden jumps in the cost of minerals — both commodity and rare earth metals such as neodymium, samarium and dysprosium — that are critically important to defense and energy technologies, automobile components and a wide range of high-tech consumer products.
How bad is the situation? Indonesia, a major mineral producer and exporter, banned the foreign sale of bauxite, copper and nickel concentrates and raw ore. China, saying that it needs to give priority to its own domestic manufacturers, banned the export of rare earth metals important in the manufacture of jet fighter engines, anti-missile defense systems, night vision goggles and smart bombs.
Such bans have led to a two-tiered pricing system for imported minerals: U.S. manufacturers pay a higher price, undercutting industrial competitiveness. Some U.S. companies have resorted to moving their manufacturing operations overseas so that they can obtain minerals at less cost.
What could turn this dangerous situation around? Congress should pass proposed legislation that would streamline the cumbersome mine-permitting process in ways that could be done without interfering with environmental safeguards. The National Strategic and Critical Minerals Production Act would achieve that.
The U.S. currently relies on imports to meet virtually all of its needs for 18 different minerals. Globally, the U.S. share of investment in mining is at an all-time low. It has dropped from 21 percent of the world’s mining investment in the early 1990s to just 8 percent today. This tailspin has cost thousands of American jobs and billions of dollars in lost revenue.
With sufficient investment, America could build its own mineral supply chain. For example, an estimated 13 percent of the world’s rare earth metal reserves are in the United States, mainly on government land overseen by the Bureau of Land Management.
Instead of relying heavily on foreign countries for commodity minerals such as copper, nickel, cobalt and titanium, we ought to make better use of our own resources.
For the original version of this column, click here: http://www.detroitnews.com/article/20140710/OPINION01/307100003