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WASHINGTON — An executive from Glencore ADR (OTC:GLNCY) and other experts at a mining conference this month pointed to a sluggish permitting system for holding back the U.S. battery materials supply chain.
While there has been some success downstream with gigafactories and cathode business, "the U.S. is extremely lacking" upstream in mining, Ash Lazenby, a senior cobalt trader with mining giant Glencore, said at a recent Benchmark Mineral Intelligence battery metals conference in Washington, D.C.
The U.S. needs to firm up its permitting timelines as "predictability" for viable projects is the main barrier to addressing a disconnect between America's energy transition aims and building up domestic capacity for supplying the raw materials for that transition, he said.
Having a rigorous permitting system doesn't preclude having a good line of sight for companies who want to develop resources, he said.
For projects with this type of visibility, "a company like Glencore would be there," he said.
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The U.S. has a host of laws designed to protect the environment while projects are being constructed, said Frank Macchiarola, chief policy officer with the American Clean Power Association.
But those laws have been used to keep projects from getting constructed at all, he said.
"We need to build things faster in the U.S.," he said. "We view it as a question of business certainty."
Project timelines can be sped up with permitting reform, not by making things worse for the environment, he added.
"It's better for the environment if we source things from the U.S.," said Richard Russell, senior vice president of government and political affairs with the National Mining Association.
The process for drafting an environmental impact statement for a project shouldn't take more than a year, even for the most complicated situations, he said. But the average timeline is now 4.5 years, and some take as long as seven years, he added.
He noted that permitting timelines spanning more than one presidential term increases uncertainty for the industry.
Data from 2015 showed that permitting delays reduced the net value of a mining project by a third, Russell said.
"It makes it more expensive to do business here," he said.
Even if a timeline is five years long, certainty helps projects attract capital, said Joshua Lanning, executive director with CIBC Capital Markets. Riskier projects make capital more expensive, he said.
Russell said that mining companies worry about going through a lengthy permitting process only to have the rug yanked out from under them because of a new round of litigation.
"There needs to be enforceable timelines," he said.
Macchiarola agreed.
"We should limit both the scope and the time with litigation," he said.
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Posted In: GLNCY
