US committee recommends royalties on minerals for EVs in sweeping reform proposal

(Reuters) – A federal committee on Tuesday recommended imposing royalties on U.S. hardrock mining for the first time, a move it said could increase domestic production by providing funds for the agencies in charge of issuing new mining permits.

The proposal was part of a suite of recommendations aimed at increasing supply of the materials like lithium, cobalt and nickel that are needed for a domestic electric vehicle (EV) industry that is key to President Joe Biden’s climate agenda.

In a 168-page report, the Interagency Working Group on Mining Laws, Regulations and Permitting broadly encouraged Congress to reform the General Mining Law of 1872, which established a system that provides free and open exploration of federal mineral deposits.

In addition to recommending royalties of 4% to 8%, the interagency group advocated for moving to a system of leasing federal lands for mining and encouraging mining claimants to develop claims in a timely manner by increasing fees over time.

Such changes would put the industry on more even footing with those like oil and gas and coal.

Increased funds could both shore up agency staff needed to speed mine permitting, engage with local communities and protect taxpayers from the cost of cleaning up abandoned mines.

“Agreeing to play by the same rules that other people are playing by can help with the public perception of the mining industry,” an Interior Department official said. “Also, if a community or a state is going to receive some of the revenue from this, then that can also either lower opposition or provide funding to address some of the issues that are causing the opposition.”

Automakers, miners, and mining states like Nevada have pressed for faster, more efficient mine permitting. Some tribes have asked for greater transparency and engagement around mine planning, while others and environmentalists have called for more studies on the pollution and safety risks of hard rock mining, pushing the federal government to limit mines.

The committee is led by the Interior Department and includes representatives from the Environmental Protection Agency, the Agriculture, Energy and State departments, the White House and the Advisory Council on Historic Preservation.

(Reporting by Nichola Groom; Editing by Aurora Ellis)