New study quantifies how much mine permit delays can discourage investment

Lawmakers pushing for mine permitting reform found support recently in a new study showing that U.S. mineral mines can lose up to half of their value waiting a decade or longer for permits. The study by SNL Metals & Mining was unveiled at a House Natural Resources Committee hearing last month on a bill to make the U.S. permitting process more efficient.

{mosads}The study, “Permitting, Economic Value and Mining in the United States,” quantifies how protracted permitting delays impair and discourage investments in domestic mineral development projects. The study suggests that an average mine can lose a third of its value due to permit delays, and in some cases, a mine’s value can be cut in half as a result of increasing costs and investment risk. After years of delays, a project can even become economically unviable.

Currently, it takes a mine in the U.S. about seven to 10 years to get the necessary permits to operate; whereas, in countries like Canada and Australia, which have similarly stringent environmental standards, it takes an average of two to three years. Luke Russell, vice president of Hecla Mining Company, told the committee that “The U.S. process is fraught with duplication [and] inefficiencies. … It is by far the most arduous and tortuous process in the world.”

The Strategic and Critical Minerals Production Act of 2015, introduced by Rep. Mark Amodei (R-Nev.), would reform the permitting process and increase access to trillions of dollars’ worth of domestic resources without compromising the standards that protect our environment. The bill sets the total review process for issuing permits to 30 months and creates a 60-day time limit to file a legal challenge to a mining project. Setting a timeline will help ensure these permits do not fall into the vicious cycle of protracted delays.

Russell testified that Alaska’s Kensington gold mine exemplified how mines in the U.S. are plagued by permitting issues during development. The mine commenced production in 2010, almost 20 years after its planned start date in 1993. The SNL study determined that by the time Kensington opened, the cost of building the mine had increased 49 percent. The company was forced to reduce gold production by nearly a third, limiting mining operations to the most profitable part of the deposit.

From an economic perspective, the study’s results further support the need for permitting reform to allow domestic manufacturers access to our vast mineral resources. The only things standing in the way of U.S. mines meeting demand for minerals, Mark Fellows, the author of the study, testified, are bureaucratic and protracted permitting delays. “This inefficient permitting system has partially blocked the pipeline along which projects advance to become productive mines,” Fellows said. SNL found that although mining companies continue to invest in exploration, an ever-greater proportion of projects are stuck in the earlier phases of development.

At the National Mining Association, our members are no strangers to our nation’s permitting problems. With this study, we hope that quantifying the detrimental effects of permitting delays will spur action in Washington. This study comes at a time when the Senate and the House are advancing bills to reform the permitting system. Alongside Amodei’s bill, Sen. Lisa Murkowski (R-Alaska) has also sponsored a bill that will modernize permitting and increase efficiency and best practices between agencies.

Now is the time to move our nation’s mineral policy into the 21st century with policies that enable economic growth and competitiveness by allowing manufacturers and other economic sectors timely access to a secure and stable minerals supply chain.

Quinn is the president and CEO of the National Mining Association.