Mark Fellows, director of consulting at SNL Metals and Mining and lead author of the study titled “Permitting, Economic Value and Mining in the United States,” recently spoke to SME about the report as part of SME’s Thought Leaders Podcast series.
The report looks at the extensive time it takes for a mine to be permitted in the United States (an average of seven to 10 years) and for the first time, a real economic cost is assigned to these delays. The delays, combined with other risks and costs can cut the expected value of mine in half, making some projects economically unviable and jeopardizing the important flow of domestic minerals.
Using the same principals used when evaluating a project, primarily cash flow analysis, the report looked at three real world examples (the Kenningston gold mine in Alaska, the Rosemont copper project in Arizona and the Twin Metal project in Minnesota) as well as a hypothetical example as a bench test to find what is the real impact of the delays on a mining project.
And the findings are eye-opening to say the least, “the Rosemont Copper Project’s value was negatively impacted by about $3 billion as a result of the three-year delay to the construction schedule from 2007 to 2010.”
Fellows tells SME that the intent of the report is to inform legislators and others who can influence the legislative process that mine permitting delays are not without an economic cost.
“Ultimately, we are trying to get the message across, on behalf of the NMA, that the mining companies are not asking for any relaxation in the stringency of the environmental controls but are only asking for some certainty and some defined time frames within the process,” said Fellows.
In other jurisdictions with equally stringent environmental requirements, such as Canada and Australia, the permitting process averages two to three years. Fellows points to the 30 or more permitting agencies in the United States as one of the primary culprits for the delay.
Fellows notes that the National Strategic and Critical Minerals Production Act of 2015, sponsored by Rep. Mark Amodei (R-NV) could help ease the situation in the United States and urges those in the mining industry to be involved with the legislative process.
“It’s in our interest as an industry to make sure legislators realize this is a real issues and it’s in the interest of the U.S. economy as a whole to ensure that it does have some security in its mineral supply,” said Fellows.
You can listen to the entire podcast at www.smenet.org/podcast