Study finds US mining investment and supply chain hurt by permitting delays

June 25, 2015

A report by SNL Metals and Mining found that protracted delays in the permitting process reduce the value of investment and that the longer the delay the greater risk is to investors and ultimately to domestic minerals supplies.

The report shows how the value of mineral projects in the United States loose value because of the length of time it takes to get a project permitted in the United States. The study, commissioned by the National Mining Association (NMA) and finds that a duplicative permitting process that can delay mining projects a decade or longer is hindering the United States’ ability to meet a rising demand for minerals. Three U.S. mines in Arizona, Alaska and Minnesota served as case studies for the research.

“For years, we have witnessed U.S. mines struggle to move forward due to an inefficient permitting system plagued by duplication, uncertainty and delays.” National Mining Association NMA President and CEO Hal Quinn said in a release posted at the NMA website. “This study now confirms the connection between the delays and their effect on companies’ decisions to invest in domestic mining projects. Hopefully it will strengthen the resolve of Congress to fix a broken permit system that threatens to break down a minerals supply chain that is critical for U.S. manufacturing.”

The study, “Permitting, Economic Value and Mining in the United States,” quantifies how bureaucratic permitting delays impair and discourage investments in mineral development projects. The study says that an average mine can lose a third of its value due to permit delays, it further finds that increased cost and investment risk resulting from the delays can in turn cut the expected value of a mine in half. This effect is compounded as delays increase; the value of investment goes down and often a project becomes unviable after several years of delay.

SNL Metals & Mining looked at the Rosemont Mine in Arizona and found that eight years of delays have dropped the value of the project by $3 billion. The Kensington Mine in Alaska was also looked at and the report found that capital cost of building the mine increased 49 percent during the 20 years it worked through the permitting process.

“The results of our study show that the current U.S. permitting process is taking a significant economic toll on the mining industry,” said Mark Fellows, study author and director of metals consulting at SNL Metals & Mining. “If things continue as they are, our projections show it increasingly less likely for new mines to advance into production.”

The report comes as both the Senate and House are working to reform the mine permitting system. Sen. Lisa Murkowski, R-Alaska, and Rep. Mark Amodei, R-Nev., have sponsored legislation to modernize the current U.S. mining permitting process and ensure access to our vast domestic mineral resources. The House will hold a hearing on its bill on June25.

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