An analysis by SNL Metals & Mining shows how delays in the US mine permitting process diminish the value of a minerals project – underscoring the urgent need for a streamlined permitting process. The study, commissioned by National Mining Association (NMA), finds that a duplicative permitting process that can delay mining projects a decade or longer is hindering America’s ability to meet a rising demand for minerals. Three US mines in Arizona, Alaska and Minnesota served as case studies for the research.
“For years, we have witnessed US mines struggle to move forward due to an inefficient permitting system plagued by duplication, uncertainty and delays,” National Mining Association President and CEO Hal Quinn said. “This study now confirms the connection between the delays and their effect on companies’ decisions to invest in domestic mining projects. Hopefully it will strengthen the resolve of Congress to fix a broken permit system that threatens to break down a minerals supply chain that is critical for U.S. manufacturing.”
The study, Permitting, Economic Value and Mining in the United States, quantifies how bureaucratic permitting delays impair and discourage investments in mineral development projects. Not only does the study reveal that an average mine can lose a third of its value due to permit delays, it further finds that increased cost and investment risk resulting from the delays can in turn cut the expected value of a mine in half. This effect is compounded as delays increase; the value of investment goes down and often a project becomes unviable after several years of delay.
In one example, SNL Metals & Mining found that after eight years of delay the value of Arizona’s Rosemont mine dropped $3 billion. And Alaska’s Kensington mine suffered 20 years of mining delays, while the capital cost of building the mine increased by 49%. “The results of our study show that the current US permitting process is taking a significant economic toll on the mining industry,” said Mark Fellows, study author and Director of Metals Consulting at SNL Metals & Mining. “If things continue as they are, our projections show it increasingly less likely for new mines to advance into production.”
The report comes as both the Senate and House are working to reform the mine permitting system. Sen. Lisa Murkowski, R-Alaska, and Rep. Mark Amodei, R-Nev., have sponsored legislation to modernise the current U.S. mining permitting process and ensure access to vast domestic mineral resources.