The following have all combined to limit control of foreign minerals by US companies:
- In 2011, resource nationalism became the number one risk for mining companies
- Nationalization
- Expropriation
- Increased taxation
- Constraints on the degree of foreign ownership
- A trend in the less developed countries toward processing their own ores
- Increased competition from large Eastern-based mega mining companies
- Increasing competition from sovereign wealth funds and end users wishing to vertically integrate
Several major and uncontrollable factors have led to a decline in mining and in the US mineral processing industry:
- Sharply higher energy costs
- Most of the world's mineral wealth is not located in the US
- Foreign ore deposits are usually richer than those found in the US
- Foreign mines are usually located close to cheap energy sources and low-cost labor
There’s plenty of blame for the US:
Restrictive environmental regulations have made mining and processing more difficult and costly, lead times for new mine development has increased and the nonfuel minerals industry is impeded by 80 different laws administered by 20 different agencies- Approximately three-fourths of the 750 million acres of public land has been closed to exploitation, and closure continues
- The US share of investment in mining is at an all-time low dropping from 21% of the world's mining investment in the early 1990's to 10 percent in 2000 and 8% today
“Gold and copper exploration in the United States kept it in sixth place regionally, ahead of the Pacific Islands.” World Exploration Trends 2012 – A Special Report from the Metals Economics Group
The Metallurgical Achilles' Heel of the United States
“The United States has consistently maintained that a strong domestic minerals and metals industry is an essential contributor to the nation's economic and security interests…The United States has a fundamental interest in maintaining a competitive minerals and metals sector that will continue to contribute significantly to the nation's economic strength and military security. The industry represents an $87 billion enterprise that employs over 500,000 US workers and provides the material foundation for US manufacturing.” The 1980 National Academy of Sciences executive summary of “Competitiveness of the U.S. Minerals and Metals Industry”
A concise summary of US mineral vulnerabilities was presented to the Industrial Readiness Panel of the House Armed Services Committee as early as 1980 by General Alton D. Slay, Commander Air Force Systems Command. He pointed out that technological advances have increased the demand for exotic minerals at the same time that legislative and regulatory restrictions have been imposed on the US mining industry.
The 1981 report “A Congressional Handbook on US Minerals Dependency/Vulnerability” singled out eight materials "for which the industrial health and defense of the United States is most vulnerable to potential supply disruptions" – chromium, cobalt, manganese, the platinum group of metals, titanium, bauxite/aluminum, columbium and tantalum – the first five have been called "the metallurgical Achilles’ heel of our civilization."
About the Author
Richard (Rick) Mills is president of Northern Venture Gorup and host of aheadoftheherd.com. He can be e-mailed at rick@aheadoftheherd.com.