May 15, 2019

Trump Tariffs Could Offer Silver Lining For U.S. Mining | Bloomberg

President Donald Trump’s trade war with China could end up being a boon for the U.S. hardrock mining industry, according to Sen. Joe Manchin (D-W.Va.).

That’s because the U.S.imports 100 percent of 18 critical minerals, known as rare earths, from foreign nations, mostly China.

The U.S. Trade Representative said May 13 it was excluding rare earth minerals from the next broad group of Chinese imports with a planned 25 percent tariff. That decision likely reflects the huge role China plays in providing the base materials needed for everything from cell phones to guided missiles.

Even so, Trump’s tariffs will make many final products more expensive for U.S. consumers if China ends up processing the rare earth elements or making products with them, John Warner, chief customer officer for American Battery Solutions Inc., a lithium-ion battery pack startup company, told the Senate Energy and Natural Resources Committee May 14.

“The tariffs will make cells more expensive for us to acquire, and that’s going to make it more expensive for our customers down the line,” said Warner, referring to battery cells.

Jonathan Evans, president of mining company Lithium Americas Corp., also agreed that tariffs will lead to higher costs and have a “knock-on effect.”

China could also simply restrict the supply of rare earths at any time in retaliation for the tariffs, according to Sen. Angus King (I-Maine).

Only one rare earth mine is currently operating in the U.S.: the Mountain Pass mine in California. But Mountain Pass’ rare earth concentrates are shipped to China for refining to metal, according to hearing witness Paul Ziemkiewicz, director of West Virginia University’s Water Research Institute.

A Silver Lining

Manchin said the tariffs might create a financial incentive for U.S. companies to extract, produce, and refine rare earths domestically, saying that outcome would be “a good thing.”

The tariffs could also spur advanced methods of squeezing rare earths out of sludge befouled by runoff from coal mining, Manchin said. West Virginia University is working on a project to do just that, Ziemkiewicz said.

“Success will turn an environmental liability into an economic opportunity while cleaning up the environment,” Ziemkiewicz said.

A recent West Virginia University survey found 700 tons of rare earth elements in sludge cells from acid mine drainage in the northern and central Appalachian coal basins, Ziemkiewicz said.

By comparison, the Congressional Research Service said in 2011 that the U.S. economy uses 16,000 tons of rare earths per year.

Administration Support

The Trump administration has been working hard to promote more rare earth mining, Joe Balash, the Interior Department’s Assistant Secretary for Land and Minerals Management, told the committee.

In December 2017, Trump issued an executive order aimed at producing more critical minerals domestically. Interior also issued a secretarial order in August 2017 to speed up environmental reviews under the National Environmental Policy Act.

The Senate has also offered its support. Sen. Lisa Murkowski (R-Alaska) introduced a bill in early May that would designate a list of critical minerals, speed up permitting, and authorize research and development for recycling them.

Another bill from Manchin would deliver $23 million per year through fiscal 2027 to the Department of Energy for a program to extract and recover rare earths from coal and coal byproducts.

Environmentalists largely support Manchin’s idea of taking rare earths out of existing coal sludge because it helps clean up the environment. But they’re skeptical of the Murkowski bill, saying it would loosen oversight of mining projects that pollute land and water.


By:  Stephen Lee