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Opinion: Mining still essential for U.S. economy

Gary Wolfram
Mining in the U.S. employs more than 1.5 million people and adds $466 billion to gross domestic product.

Recently my son and I visited my 95-year-old father in Tucson, Ariz., and took him to Tombstone, “The Town Too Tough to Die.” While most people are familiar with the gunfight at the OK Corral, it is unlikely that they know that Tombstone came into existence because a young prospector discovered silver there and mining operations that made it one of America’s last boom towns. Its population grew from about 100 to 14,000 in just a few years.

Mining has long been an important industry in the U.S., with gold and silver being the minerals that received the most attention. Today mining in the U.S. employs more than 1.5 million people and adds $466 billion to gross domestic product. In 2017, mining operations generated an estimated $17 billion in federal, state and local taxes. It is essential that this industry remain competitive, especially given the importance of mining in providing resources for electricity generation and the minerals necessary for manufacturing, health care and defense technology.

Few are aware of the need for certain minerals and metals in their medical equipment, cellphones, laptops and any number of products we use every day. Demand for these minerals is growing and will continue to grow. As just one example, electric vehicles and renewable energy systems will require higher volumes of copper, lithium and other materials. It is important to make sure that Congress does not take actions which make it unprofitable to obtain these minerals, and thus create serious problems for our manufacturing and defense industries.

Mining is heavily regulated to ensure that its possible negative effects are accounted for. They are correctly subject to the National Environmental Protection Act, the Endangered Species Act, the Clean Water Act, the National Historic Preservation Act and several other laws. However, recent attempts to use the Mining Law of 1872 to add to these regulations and to levy royalties on the mining industry are likely to impose costs on the economy that far exceed any potential benefits. These costs affect us all in ways that might not be expected.

For example, according to the U.S Geological Survey, rare earth elements are necessary components of more than 200 products across a wide range of applications, especially high-tech consumer products and defense systems. Making it difficult to economically extract these minerals has wide-ranging economic and political effects. It is useful to know that today China accounts for more than 95 percent of the world production of rare earth elements, whereas in 1993, 38 percent of world production was in China and 33 percent was in the United States.

Rather than further limiting our mineral industry, we should be examining ways to improve mining. Among the critical metals which are on federally owned public lands often beyond the reach of mining companies include manganese, cobalt, nickel, graphite, aluminum and several rare earths. In fact, the U.S. is 100 percent import-reliant for 18 minerals — 14 of which have been deemed “critical” by the departments of Defense or Interior.

Mining requires a long-term investment. It is not unusual to spend years and millions of dollars exploring for mineral deposits that can be produced economically. Then the infrastructure must be installed to extract the minerals. It should be obvious that there is a good deal of risk and uncertainty in the industry. It can take a decade or more for a company to even get a permit to mine. Given the high importance of mining to our economy, Congress should avoid adding to this uncertainty by attempting to add to the industry’s regulatory burden.

Congress should consider improving the ability of mining firms to search for and extract the important minerals that are primarily to be found on public lands in the west, particularly given the uncertainties in international trade and international relations. It is appropriate to exclude mining from areas such as national parks, wilderness areas, wildlife refuges, recreation areas and the like. It is also appropriate to ensure that negative effects of mining are accounted for. However, it will strengthen our economy, environment and national defense if we can find ways to improve the economic extraction of vital minerals, and this should be Congress’ goal.

Gary Wolfram is William Simon professor of economics and public policy at Hillsdale College.