Inside the Colorado Mining Industry: Impact of Broken Regulations for US
It takes between 7 and 10 years to get necessary permits for mining projects in the US. This is a huge problem.
In the United States, our regulatory regime for mining project development is broken.
It takes between 7 and 10 years to get the necessary permits to operate in the U.S. This makes it incredibly difficult for U.S. mines to compete on a global scale and to get the investment necessary to start in the first place. In Australia and Canada, this same step takes on average 2 years.
These issues are important for Colorado because of the state’s significant mineral endowment. Colorado has historically been a major producer of gold, silver, molybdenum, lead, zinc, uranium and tungsten, and has deposits of a litany of other critical minerals. A new paper from the Institute for Energy Research, The Economic and Strategic Importance of Domestic Mineral Production, explores these issues and offers pathways to unlocking potential mineral resources in Colorado and elsewhere.
The market for critical minerals is only expanding at present. Because of new net zero policies that favor investment in wind, solar and electric vehicle technologies, the demand for these materials is ever-increasing. Currently, a majority of critical minerals are controlled by China in some way, whether that be the mining itself, or the refining process.
READ: Becoming a Zero-Emissions State — How Alternative Fuels Are Transforming Transportation in Colorado
An important illustration of both the price concern and the worry over China’s outsized control of minerals production is lithium. Due to its role in EV’s and as well as other technologies like cell phone batteries, the demand for lithium has skyrocketed in recent years. Lithium prices were below $10 per Kilogram(kg) in 2020, rose to a staggering high over $80 per kg in late 2022, and settled back down at around $45 per kg in March of this year. Price spikes like this and overall price increases are becoming all too common for critical minerals as demand scales up far more quickly than supply. China controls the majority of the world’s lithium output with sizable mines located in South America and Australia as well. Although the U.S has 3 percent of the world’s lithium deposits, it nonetheless produces very little.
That’s not to say there are no lithium projects underway in the United States. There are: Pioneer Ltd’s lithium mine and the Thacker Pass Lithium mine, both under development in Nevada, will produce significant amounts of lithium once they are allowed to open. But both of these projects have been through lengthy permitting and approvals processes and have been held up along the way by additional factors. Thacker Pass alone could produce a quarter of global lithium demand once opened.
The motivation to produce these minerals domestically exists, but a measure of regulatory certainty is necessary to encourage further development. When developers can expect 7 to 10-year waits and unforeseen additional delays and hurdles, money that would otherwise be used to develop critical minerals supplies will inevitably be used to do so elsewhere or used for other purposes entirely. NEPA reform and other measures are necessary for international security as our dependence on China for these minerals becomes an increasing concern, as well as for economic reasons as prices rise and supply of these materials becomes tighter.
Paige Lambermont is a Policy Associate at the Institute for Energy Research. In her role, she writes about the impacts of government policy on energy markets. She has a bachelor’s degree in political science from American University and is from Butler, Pennsylvania.