In recent years, the global shift towards sustainable practices has prompted international governments to reassess their approach to mining exploration. There has been a notable surge in support for greenfield and brownfield mining projects, evolving legislative frameworks, expanding strategic partnerships, and increased funding; with governments progressively adopting new initiatives to boost the exploration and production of new mines.
This recognition has emerged at a pivotal time, as mining companies have faced continuous obstacles in their search for critical materials, with long permitting and licencing times, increasingly stringent ESG requirements, and stagnant investment into the sector not matching expected metals demand.
Permitting and processing woes
One of the major obstacles facing miners today is the permitting process. Permitting is often extremely tedious and can delay mine production for years. To combat this, certain governments are working to simplify and expedite the process. This involves reducing bureaucratic hurdles, minimizing delays, and providing clearer guidelines for obtaining exploration licences. By making it easier for companies to navigate regulatory processes, governments aim to attract investment and stimulate exploration activities.
An example of government legislation aimed at reducing permitting time in the US is the National Environmental Policy Act (NEPA). The act was amended in 2020 to expedite the environmental review process for certain infrastructure projects, including mining activities. This amendment is part of broader efforts to streamline regulatory processes and accelerate the development of critical projects.
NEPA provides a framework for federal agencies to assess the environmental impacts of proposed projects before they are approved. The 2020 amendment, titled the “Council on Environmental Quality (CEQ) Final Rule,” introduced changes to the NEPA regulations, including provisions to expedite the permitting process for infrastructure projects, such as mines.
Similarly, Australia implemented a “One-Stop Shop” policy to streamline the environmental approval process for major projects, including mining developments. The initiative was designed to reduce duplication and overlap in regulatory processes across different levels of government.
Under the policy, the Australian government, in collaboration with state and territory governments, worked to establish a single point of contact for environmental assessments and approvals. The aim was to create a more efficient and coordinated approach, reducing the time and complexity associated with obtaining necessary permits.
The amendment establishes time limits for completing Environmental Impact Statements (EIS), which are comprehensive assessments of a project’s potential environmental impact. For projects such as mining activities, agencies are directed to complete an EIS within two years.
Additionally, the Canadian government has been engaged in efforts to streamline permitting processes for resource development projects, including mining. Prime Minister Justin Trudeau’s government hopes to unveil a plan by the end of this year to streamline permitting for mining projects as the US and its allies push to accelerate the production of critical minerals in North America.
Canada faces mounting pressure to keep pace with its southern neighbour as the US ramps up efforts to secure the metals needed for electric vehicles, solar panels, and wind turbines. US lawmakers have been debating legislation that could substantially speed up approval times for resource projects.
By making it easier for companies to navigate regulatory processes, governments aim to attract investment and stimulate exploration activities
Many countries have recently introduced legislation addressing critical minerals production, processing, and manufacturing. Canada updated its Critical Minerals Strategy (December 2022), the EU released its Critical Raw Materials Act (March 2023), the UK refreshed its Critical Minerals Strategy (March 2023), and Australia has recently updated its existing strategy in 2023. The most significant of these, however, is the US Inflation Reduction Act (IRA), the largest piece of climate-focused legislation in US history.
With approximately US$370B in spending and tax credits to support clean-energy industries and supply chains, the IRA significantly increases the volume of public capital available for critical minerals investments. Complementing the IRA are other US laws and policies, such as the CHIPS and Science Act and various “Made in America” provisions. The IRA presents vast opportunities for big mining companies. Though miners can’t physically move their mines to the US, they can make changes to their operating processes, investment plans, offtake arrangements, processing routes, and workforces to capitalize on the IRA’s incentives.
Over the past year, more and more governments have sought to obtain access to critical minerals through reinforced strategic alliances or new trade deals. Most noteworthy agreements have only been established in recent months, so the full impact remains to be seen. Reconfiguring existing supply chains will require enormous levels of new capital, and it could cause supply disruptions and price volatility.
An example of strategic alliances and trade agreements crucial to supporting upcoming mining developments is the establishment of the Minerals Security Partnership (MSP) led by the US Department of State, the MSP was established to stimulate government and private-sector investment. Partner governments include Australia, Canada, Finland, France, Germany, Japan, South Korea, Sweden, the UK, the US, and the EU.
Similarly, the Australia-India Economic Cooperation and Trade Agreement (AI-ECTA), which was announced June 2022, was established to strengthen cooperation in the development of critical minerals assets and supply chains. The AI-ECTA removes tariffs for most Australian critical minerals and offers India improved access to the world’s leading supplier of these resources.
Finally, the US-Japan Critical Minerals Agreement, announced March 2023, is a trade deal on battery minerals (lithium, nickel, cobalt, graphite, and manganese), to aid Japanese automakers and critical minerals processors access the benefits of the 2022 US Inflation Reduction Act.
“Today’s announcement is proof of President Biden’s commitment to building resilient and secure supply chains,” said Ambassador Katherine Tai.
“Japan is one of our most valued trading partners and this agreement will enable us to deepen our existing bilateral relationship. This is a welcome moment as the US continues to work with our allies and partners to strengthen supply chains for critical minerals, including through the IRA.”
Governments have also been busy establishing funds to support investments in critical minerals projects and supply chains. Export Finance Australia, for instance, has introduced the Critical Minerals Facility to address gaps in private financing for critical minerals projects. In 2022, the agency reached an agreement to provide a loan of US$1.05B to Iluka Resources (ASX: ILU), for the construction of a fully integrated rare earths separation facility in Western Australia.
“Australia has the best resource industry in the world, and we have an unrivalled competitive edge when it comes to being a reliable, sustainable provider of critical minerals and rare earths,” the Australian Prime Minister said.
“Our support for this project will capitalize on our advantages, helping to strengthen Australia’s critical minerals supply chain while also creating huge job and economic opportunities for Australians for generations to come.”
Additionally, a portion of the Australian Government’s US$15B National Reconstruction Fund is reserved for critical minerals companies that contribute to the development of processing, refining, or manufacturing capacity within the country.
Likewise, the US government is actively allocating substantial funding to support critical minerals projects. The Department of Energy’s Loans Program Office issued a conditional commitment of US$2B to US battery recycler Redwood Materials for the establishment of a battery materials campus in Nevada. Conditional offers include US$700M to US mining company Iioneer (ASX: INR) for the advancement of the Rhyolite Ridge lithium and boron project in Nevada, and US$102M to Syrah Resources (ASX: SYR) for the establishment of a graphite processing facility in Louisiana.