America needs a mining comeback

By Nicholas Lugansky

This is a lightly edited excerpt of testimony recently provided to the U.S. House’s Natural Resources Oversight and Investigations Subcommittee hearing on titled, “Unleashing American Energy Dominance and Exploring New Frontiers.” 

Today, we stand at the threshold of a transformation as profound as the first Industrial Revolution. It is imperative that we explore how the United States can unleash American energy dominance and secure its leadership in the global economy.

The world is witnessing a paradigm shift, an era where oil and gas, the backbone of the 20th-century economy, especially in the United States, are gradually being replaced by minerals essential to building an electrified and digital future.

As the global economy pivots from fossil fuels towards a foundation built on mining and metals, an industry that supplies critical materials to sustain our electrical grid, mobility, advanced technologies and the defense industry. The question is how the United States can maintain its dominance, considering it is currently a net importer of most metals and minerals required for this transition.

Before I answer this question, please consider this:

1. The electrical grid transmission systems require large amounts of copper, aluminum, nickel, steel, plus lithium and rare earth elements (REE) for battery storage for a more and more distributed grid.
2. The electric vehicles and e-mobility rely on lithium, copper, cobalt, nickel, steel, aluminum, and minerals that go into the advanced electronics.
3. The advanced electronics need minerals such as lanthanum, cerium, neodymium, and europium for semiconductors; europium, terbium and yttrium in LED displays used in phones, TVs, cars, etc.; and gadolinium and lutetium for medical equipment like MRI.
4. The US defense industry requires a long list of critical minerals to develop weapons that provide for our national security and military supremacy; these range from well-known elements such as copper, titanium, and aluminum to REEs such as promethium (used in nuclear batteries), neodymium, dysprosium, and terbium for military electronics; and praseodymium for magnets, one of the most critical components in defense and aviation systems.

Today, the world has several challenges:

First of all, there are not enough of these minerals mined to meet the growing demand spurred by the world’s electrification.

To meet the projected demand, we need to open 293 new mines in the world by 2030, according to Benchmark Minerals, among them:

• 70 lithium mines 
• 70 nickel mines 
• 80 copper mines 
• 30 cobalt mines 
• And numerous small REE mines or recycling facilities.

Secondly, the mineral supply chains, particularly those related to lithium and rare earth elements, are largely dominated by China.

So what do we do:

1. Mining and the adoption of the new technologies for faster, cheaper and more sustainable mineral extraction.

Mining is one of the most capital-intensive and strategically vital industries in the global economy. From exploration to production, the development of a single mine can require many billions of dollars in upfront investment, which covers land acquisition, permitting, infrastructure, equipment and processing facilities. For example, the capital expenditure (CAPEX) of the top 40 global mining companies reached $72 billion USD in 2021, underscoring the scale of financial commitment required to bring mineral resources to market.

This intensity is not limited to initial investment. Operating expenditure (OPEX), which includes labor, energy, maintenance, water management and environmental compliance, can rival or exceed CAPEX over the life of a mine. Yet, despite its economic significance, mining remains under pressure to modernize.

The challenge lies not in inventing the technologies but in translating these innovations through establishing operational and cultural bridges between the two industries to unlock shared value. We strongly believe that the adoption of advanced technologies in mining delivers tangible benefits across the entire stakeholder spectrum from operators to investors, and, of course, to communities. According to McKinsey, digitization in mining can lead to a 10–30% increase in productivity, a 20– 40% reduction in operating costs, and a 50% decrease in downtime.

2. Support domestic production and especially expedite permitting for domestic producers.

The domestic supplier is facing two pressures: one is a long federal, state, and local permitting process, and the other is a commodity pricing uncertainty for capital-intensive projects. I am not going to dwell on these, as much of the industry has been discussing these concerns. I would just urge the committee to take decisive action that will help the domestic producers and allow to shorten the mining project development cycle from 15-20 years by 3-5 times.

3. Foster a competitive domestic and partner mining and metals market.

US industries grow the best if there is healthy competition. We thus need to ensure that regulators provide equal access to water, land and mineral resources to all players and take appropriate action if some actors try to monopolize these resources.

Read the full testimony here.

View an excerpt of the testimony here.

Nicholas Lugansky is the Head of Mining at SLB New Energy. 

_{*The opinions expressed in this column are those of the author and do not necessarily reflect the views of EnergyPlatform.News.}