The US mining industry is currently navigating through a multitude of challenges that include environmental and climate change pressures, trade disputes stemming from geopolitics, uncertain demand, technological advancements, and a shortage of mining engineers. These obstacles are further compounded by a talent squeeze within the sector, primarily driven by the evolving nature of work, shifting preferences of workers, and the increasing importance placed on environmental, social, and governance (ESG) considerations.

Of particular concern is the heavy reliance on imports for critical minerals. The United States is a net importer of at least 12 essential minerals, including Arsenic, utilized in semiconductors; Gallium, vital for integrated circuits and optical devices like LEDs; Graphite, employed in lubricants, batteries, and fuel cells; and Tantalum, predominantly used in electronic components such as capacitors and superalloys. Alarmingly, these minerals are entirely imported from China, creating vulnerabilities in the supply chain.

Furthermore, there are an additional 31 critical minerals identified, with the US relying on imports for over 50 percent of its requirements. These "critical minerals" are nonfuel minerals or mineral materials deemed essential for the economic and national security of the United States. The current state of these supply chains underscores the need for strategic planning and a focus on bolstering domestic production capabilities.

The United States is poised to experience a surge in mineral demand, driven by the dual forces of digitalization and decarbonization. Notably, the mineral inputs required for an electric vehicle are approximately six times higher compared to a conventional car. Recognizing the importance of fostering domestic manufacturing, the country aims to introduce legislation that includes incentives for sourcing materials domestically.

However, UBS Research highlights that reintroducing mining operations in the US will be an immense challenge due to geographic limitations, the time required to establish new mining capacity, and concerns surrounding the environment and local communities. The timeline for mining projects varies depending on the mineral, but on average, it takes approximately 16.5 years to move projects from discovery to production, as estimated by the International Energy Agency (IEA). This underscores the inherent difficulties in expanding US mining capacity.

Although the incentives to use more US materials especially in batteries, has spurred a number of battery recycling projects in the country. There is an increasing likelihood to see companies continue making partnerships in an attempt to secure materials.

However, favorable geopolitical relations will be required to achieve this smoothly. For example, China currently controls nearly all of the market for polysilicon, which is used in the vast majority of solar panels. If relations between the US and China deteriorate, it could favor alternatives to polysilicon solar panels, such as thin film.

What is US government doing to mitigate the mining challenges?

Over the last three years, the US government has passed three acts aiming to boost domestic manufacturing of critical resources. First, the Infrastructure Investment and Jobs Act which was enacted in November 2021, authorized $1.2 trillion in total expenditures and $550 billion in new infrastructure spending over five years.

Second, the Inflation Reduction Act enacted in August 2022, extended and increased the tax incentives to promote the adoption of renewable energy, increase the production of electric vehicles, and boost domestic production of solar panels and wind turbines. Third, with the CHIPS and Science Act enacted in August 2022, nearly $53 billion was provided to boost semiconductor fabrication capacity. All of these three acts aim to reduce US reliance on other nations for critical minerals.