In his budget address, President Barack Obama renewed his commitment to “green” energy. Whether this push will have actual policy implications for the domestic mining sector still remains to be seen. However, one area of his budget request would most definitely have an impact if enacted, spelling trouble for a number of critical metals, including our “Metal of the Month” – silver.
To generate nearly $75 million in additional federal revenues, the budget seeks to end an exemption from royalty payments for the privilege of extracting from public lands granted to most hard rock miners under a 140 year-old law. Similar to payments currently made by coal companies, fees would have to be paid into a “hard rock abandoned mine reclamation fund.”
As gold, silver and copper miners in the U.S. are already subject to significantly higher fees and taxes than miners operating in other parts of the world, the proposed “reform” would place them at a further competitive disadvantage. The envisioned switching of the old claim rights system to a leasing system would furthermore add new layers of bureaucracy to an already onerous permitting system. Ultimately, according to studies conducted by the National Mining Association, the plan would likely “discourage new mine openings and result in mine closures, significant job losses, and substantial state and federal revenue losses.”
To budget-writing bureaucrats, metals like silver and copper may just be an attractive source of revenues for federal coffers, but as we have pointed out, they are far more than your traditional adornments and industrial metals – they are highly critical resources playing an key role in securing our strategic and economic future. Particularly at a time when the rest of the world is off to the races to meet and secure its own critical mineral needs, the worst thing Washington, D.C. can do is penalize our domestic industries working towards that end.