Making a NATIONAL MINERALS POLICY a Reality National Mining Association th 1130 17 St., N.W., Washington, D.C. 20036 (202) 463-2621 • www.nma.org Last Updated: March 12, 2002 1 Making a NATIONAL MINERALS POLICY a Reality -- Contents -- 1 Overview 2 Mining is Vital for America 3 The Mining & Minerals Policy Act Passed by Congress in 1970 Recognizes the Importance of Mining and Minerals. 4 Yet . U.S. Mining Activity in Recent Years has Declined Rather than Increased. 5 Exploration for New Resources, an Investment Toward Future Mineral Production and Supplies, is being Increasingly Directed Away from the United States. 6 Mine Development is Being Impacted. 7 There are Fewer Operating U.S. Hardrock Mines. 8 Meanwhile, Foreign Governments have Encouraged Mine Exploration and Development. 9 U.S. Policy, in Contrast, has Discouraged, Not Encouraged, its Mining Industry. 10 Repeating the Energy Mistake -- Increased U.S. Reliance on Imported Minerals. 11 Increased Dependency on Imports is not in the National Interest. 12 Minerals/Metals Provide Essential Products. 13 How a National Minerals Policy can Help. 2 Overview A 1970 federal law -- the Mining and Minerals Policy Act -- formally recognized the importance of mining and domestic minerals production as a policy of the United States. Yet, the domestic mining industry has declined. While various factors (including market conditions, more favorable operating possibilities and higher grade ore prospects overseas) have played a role in this trend, several analyses of America's hardrock mining industry have reached the same conclusion: . the complexities, uncertainties and time delays associated with permitting of operations on public lands have resulted in significant reductions in investment in the U.S. and greater reliance on foreign sources of minerals vital to our nation's economic well-being. Unless reaffirmation of a National Minerals Policy becomes a reality, the U.S. will continue to lose its mining industry to other nations who actively recruit and desire this important economic asset. The net result: A growing need for mineral imports, loss of highly skilled and high wage jobs, deepening economic consequences. 1 3 Mining is Vital for America t provides nearly a half- I trillion dollars ($491.8 billion) annually in direct and indirect economic impact -- nearly 5 percent of the U.S. (Source: "Mining and the American Economy," using 1998 data, prepared by the Western Economic Analysis Center for the National Mining Gross Domestic Product. Association, published in 2000.) very American uses an Eaverage of 48,000 pounds of newly mined minerals each year (Source: NMA extrapolation based on U.S. Geological Survey (minerals) and -- and about 7,600 pounds of Energy Information Administration (coal) data.) coal annually. ne out of 43 Americans is Oemployed in a job that depends -- directly or indirectly -- on mining. (Source: NMA calculation based on data from Western Economic Analysis Center, U.S. Bureau of Labor Statistics and U.S. Department of Agriculture.) 2 4 The Mining & Minerals Policy Act Passed by Congress in 1970 recognizes the importance of mining and minerals. "The Congress declares that it is the continuing policy of the Federal Government in the national interest to foster and encourage private enterprise in the development of economically sound and stable domestic mining . (and) the orderly and economic development of domestic mineral resources . " Mining & Minerals Policy Act of 1970 U.S. Code Title 30, Chapter 2, Section 21A 3 5 Yet . U.S. mining activity in recent years has declined rather than increased. 1. Expenditures for exploration, an activity essential for developing new mines, have steadily decreased in the U.S., and increased in Latin America and the Pacific. 2. U.S. mine development expenditures and metals/nonmetal "plans of operation" on federally owned land dropped drastically over the past decade. 3. The number of U.S. metal/nonmetal mines has declined 61 percent since 1980. 4. U.S. reliance on mineral imports has risen nearly sevenfold in terms of value since 1993. A Key Reason: An increasingly difficult, unbalanced federal regulatory policy has achieved an effect opposite the intent of the Mining & Minerals Policy Act -- discouraging, rather than U.S. Explorationencouraging, the Activity U.S. mining is industry. Decreasing. 4 6 Exploration for new resources, an investment toward future mineral production and supplies, is being increasingly directed away from the United States. 70 60 50 40 Percent 30 Trend in Exploration Spending Favoring New Mining Areas, 1993-98 (Traditional: Includes the U.S., Canada, Australia and Europe; New: Includes Latin America, the Pacific, Asia and Africa). 20 Taken from U.S. Metal Mining: Recent Trends and Uncertainty Discourage Domestic Exploration and Investment, page 3. Original source 10 based on Metals Economics Group estimates, reported in Mining Engineering, May 2000. 0 1993 1994 1995 1996 1997 1998 Traditio nal New North American Precious Metals Precious metal producers, an important Producers' U.S. Exploration segment of the hardrock mining industry, Expenditures, 1996-99 decreased U.S. exploration expenditures 66 1996: $113,304,000 percent between 1996-99. 1997: $153,046,000 Down 1998: $ 89,160,000 66% 1999: $ 39,143,000 Worldwide Exploration Budgets, 2001 (Million $) Source: 1998 Gold Institute Survey conducted by Dr. John Dobra, University of Nevada-Reno. 1. Latin America $575.8 2. Australia $349.4 3. Canada $332.9 Although currently a major producer 4. Africa $276.9 5. Other Nations Combined $175.0 of some 78 important mined minerals, 6. United States $158.2 the U.S. ranks only sixth (according 7. Pacific/SE Asia $133.0 to a recent survey of 679 companies' budgets) in 2001 allocations for Total $2.001.2 commercial precious and nonferrous metals exploration -- since 1998, the (Source: Survey by Metals Economics Group, as reported in December 2001 Mining Engineering). U.S. figure has declined nearly $85 million, or 35 percent. 5 7 MineMine Develo Developmentpment is is BeinBeingg Impacted. Impacted. Lands administered by the Bureau of Land Management (BLM) and the U.S. Forest Service (USFS) comprise 38 percent of the combined land area of western states, where most hardrock mining occurs. National policy affecting the availability and use of these lands has significant implications for the mineral extraction industry as a whole. Federal Lands in the United States In a 1999 study, Hardrock Mining on Federal Lands, the National Plans of Research Council reported to Congress that total "plans of operations" Operations on federally owned land in the United States declined by 50 percent down between 1992-99. Under current law, "plans of operation" must be 50% submitted to BLM by mining exploration that is over 5 acres or near critical environmental areas, and operations that disturb any acreage. 6 8 There are fewer operating U.S. Hardrock Mines. 2500 1980 = 2,305 2000 1500 2000 = 893 1000 Total Metal, Non-Metal Mines The total number of U.S. metal/nonmetal 500 mines has declined 61 percent since 1980. (SOURCE: Mine Safety & Health Administration data; NMA website, www.nma.org) 0 1980 1985 1990 1995 2000 (Factors impacting this trend include exhaustion of resources; closing of less profitable, more inefficient operations; commodity price fluctuations; and the impact of an increasingly strict and costly federal regulatory regime.) Between 1996 and 1999, a nearly 88 percent drop occurred in U.S. development expenditures by precious metals producers, an important segment of the hardrock mining industry. This coincided with a nearly 452 percent rise in such expenditures by these companies in South America. North American Precious Metals Producers' Development Expenditures, 1996-99 (000 Dollars) Country 1996 1997 1998 1999 %Change 1996-99 United States 239,772 211,375 162,129 29,200 - 87.8 Australia 490 717 13,757 800 + 63.3 South America 109,527 234,128 420,721 604,000 + 451.5 Other 95,300 76,531 63,206 170,000 + 78.4 Total 445,089 519,781 659,813 804,000 + 80.6 Source: 1998 Gold Institute Survey conducted by Dr. John Dobra, University of Nevada-Reno. The Bottom Line: Areas of the world once considered too risky politically and economically for mine exploration and development are now viewed as more attractive than the unpredictable, overly restrictive regulatory climate in the U.S. -- where permitting a mine can take 4 to 8 years. 9 7 Meanwhile . foreign governments have encouraged mine exploration and development. In contrast to decreasing activity in the U.S., many governments in areas currently experiencing robust mining activity have instituted policies and procedures with the specific aim of encouraging exploration and development. Since 1985, more than 95 countries have instituted reforms of their laws to attract new mines by either amending existing statutes and regulations or adopting new regulatory frameworks entirely. (Source: James M. Otto, "Global Changes in Mining Laws, agreements and Tax Systems," Resources Policy, Vol. 24, No. 2, 1998, pp. 79-86, as reported in U.S. Metal Mining: Recent Trends and Uncertainty Discourage Domestic Exploration and Development, by Yvette Alt and David Lundy, Industry Trade and Technology Review, January 2001). Minera Yanacocha in Peru, the largest gold prodcer in Latin America. In general, these mining law changes have embraced regulatory reform, free-markets and privatization. They also include stringent environmental safeguards similar to those in the U.S., including