Mark mellow , CEO of SNL Metal & Mining, in London reports that of all the developed nations, unexpected and often unnecessary delays in obtaining mining permits afflict the U.S. most severely. Despite being blessed with a vast reserve of mineral resources, the U.S. only accounts for 7 percent of world-wide spending on mineral exploration and production is currently reliant on a population of mature mining projects. The average remaining life of active mines in the U.S. and the share of projects in
advance development have also fallen in recent years. Meanwhile, the demand for minerals to supply the defense, advanced energy, high-tech electronics, medical,
and transportation industries is rising. The U.S., while leading on the manufacturing of these technologies, is lagging in the production of the minerals needed to make them.
SNL Metals & Mining quantifies for the first time how much permitting delays impair and discourage investments in mineral development projects. It found that
on average, a typical mining project loses more than one-third of its value as a result of unexpected delays in receiving the numerous permits needed to begin
production. The longer the wait, the more the value of the investment is reduced, even to the extent that the project ultimately becomes an unviable investment. The report
also shows the increasing likelihood of new mines stagnating at the exploration stage, with far fewer advancing to actual production, putting security of the country’s mineral supply at risk.
In the U.S., the requirement for multiple permits and multiple agency involvement is the norm, as is the involvement of other stakeholders, including local indigenous groups, the general public and nongovernmental organizations. As a consequence of the country’s inefficient permitting system, it takes on average seven to 10 years to
secure the permits needed to commence operations in the U.S.
To put that into perspective, in Canada and Australia, countries with similarly stringent environmental regulations, the average permitting period is two years. In these countries, the timeline for the government to respond is more clearly outlined, the specification of lead agencies is clearer and the responsibility for preparing a well-structured environmental review is given to the mining company, not the government.
Mining is a long-term investment; from exploration to closure and site remediation, projects typically have a life span of several decades. Although geology and topography dictate where a deposit is located and how it is mined, it is economics that determines whether the project proceeds or not. Even a large high-grade deposit
will remain unmined if the revenue-cost balance and timetable are not advantageous.
Mining companies accept that there will always be some element of delay during the development period and will build appropriate contingency and mitigation measures
into their business plan. However, delays for unforeseen reasons, or the delays to the expected process, are a real problem for the industry, and by extension, the U.S.
economy as a whole.
KEY FINDINGS of THE REPORT:
• Unexpected delays in the permitting process alone reduce a typical mining project’s value by more than one-third.
• The higher costs and increased risk that often arise from a prolonged permitting process can cut the expected value of a mine in half before production even begins.
• The combined impact of unexpected, and open-ended, delays and higher costs and risks can lead to mining projects becoming financially unviable.
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