Protracted permitting process at odds with energy transition

Andrea Hotter speaks with the US Secretary of Energy, Jennifer Granholm, about the protracted metals and mining permitting process and its impact on the supply of critical minerals for the energy transition

The protracted metals and mining permitting process drives US Secretary of Energy Jennifer Granholm “absolutely nuts.”

She’s not the only one.

It’s always taken a while to complete the permitting process, but metals and mining industry executives have become increasingly frustrated in recent months by continued holdups, hinderances and hesitation by regulatory authorities to approve their projects around the world.

It comes with a strengthening spotlight on the development of supplies of critical minerals for the energy transition, which has added impetus to key copper, nickel, lithium, cobalt and other projects deemed essential for assisting this.

Ironically, a more intense focus on environmental, governance and social (ESG) issues has been accompanied by additional scrutiny to the permitting process, which is adding to these delays.

“One of the huge challenges to the energy transition is the barriers to deployment that drive me absolutely nuts - things like the length of time it takes to get a permit. We know that permitting was instituted for good reasons and creates really valuable ways of improving and bettering the environment,” Granholm said during a recent webinar.

“Sometimes though, over time, those permits can just defeat the purpose entirely. The fact it takes five years to get a permit on public land for a geothermal plant for example, especially if you’re not infringing on tribal rights or other factors, it’s just insane,” she added.

Ensuring project credentials are impeccable is essential for the granting of any permit.

Nobody wants to see a project fail to achieve what the industry calls its license to operate and discover a year or two down the line that poor safety standards led to a fatal accident, that the rights of indigenous groups had been infringed, or that environmental failures created spillages into local water supplies or added toxic emissions into the air.

Unfortunately for the metals and mining sector, neither does the general public want to see an industrial project spring up in their own back yard.

That’s not a new phenomenon, but it highlights the work the metals and mining sector must do to improve its reputation as good ESG citizens.

It’s a view echoed by mining industry executives.

“We don’t see any limitations on the supply of concentrates from good mining sites [now]. But it’s becoming more difficult around the world to get permits to mine or security for the large, upfront investments that are part of a mining operation,” chief executive officer of Europe’s largest copper producer Aurubis, Roland Harings, said.

“Everybody wants to have copper but there is always opposition that tends to not consider the contribution the metal makes to the world. But if you make an omelet, you need to crack some eggs!” he told Fastmarkets in a recent interview.

Copper projects

Over the years, there have been many examples of projects facing permitting delays for a variety of reasons, including bureaucratic, environmental, community and political factors, among other things.

It may be down to a rush to progress developments in the race to drive the energy transition, but there seem to be a lot more industry frustration around regulatory delays in recent months.

Often delays come from rejected permits, which then get tied up in the courts for months, sometimes years.

Take copper, whose use in the modern economy for grid and electric vehicle charging infrastructure as well as renewable energy is well documented.

Earlier this year in the United States, two leases at Antofagasta’s Twin Metals project in Minnesota were canceled by the federal government, leading the Chilean mining company to consider legal action.

The cancelations were on environmental grounds but came before a full environmental review process had been completed.

Incidentally, Antofagasta just exited the giant Reko Diq project in Pakistan, a project that was suspended in 2011 due to a dispute over the legality of its licensing process.

With Barrick the sole international miner left at the helm, the company will be hoping for a smoother path for what is widely viewed as one of the world’s largest undeveloped copper deposits.

Glencore-owned Polymet is still working through the appeals courts to secure the necessary permits for its nickel-copper operation in Minnesota, while Hudbay’s Rosemont project has been delayed by court decisions.

Northern Dynasty’s Pebble copper project in Alaska, meanwhile, continues to be plagued by decades-long environmental permit concerns and consequent lawsuits which have led to mining giants Anglo American and Rio Tinto both walking away from their investment stakes.

Taseko Mines recently received the initial draft of the final permit it needs to begin construction at its Florence Copper project in Arizona, which it inherited through its acquisition of Curis Resources back in 2014. It expects to get approval sometime this year and will then be able to start construction, a process that can take on average two to four years.

Nevada Copper, which operates the Pumpkin Hollow mine in Nevada, started drilling in 2010 and shipped its first concentrate at the end of 2019.

That’s viewed as a relatively fast timeframe for project development, but still not fast enough if the needs of the energy transition are to be met.

Other minerals

Delays aren’t just limited to copper projects.

The Salton Sea area of California, dubbed the United States’ ‘lithium valley,’ is facing a similarly protracted permitting process despite cries for the critical mineral, used in batteries for EVs.

In Europe, Rio Tinto pushed out the start date of its Jadar lithium project due to slower than expected permitting and then found itself with no project at all when the regional government rescinded its exploration license.

And at a time when the circular economy is being touted as a solution to help meet raw materials demand, the US city of Chicago recently denied Reserve Management Group (RMG) a final permit to operate a shredder.

Iron ore projects in Brazil in particular face lengthy delays - to be fair, the history of tailings dam disasters in the country is reason enough to ensure that everything is in order.

Solutions

According to Sec. Granholm, the government is aware of the bureaucratic aspect of the permitting process and is working to streamline things, including by avoiding duplication of work by departments.

One of the problems, said World Copper CEO Nolan Peterson, is the industry often adopts a “cookie-cutter approach” to projects, which in turn can result in delays in gaining permits.

Smaller is better, he said, with projects developed in stages and phased in incrementally, accompanied by a gradual increase in benefit-sharing with local stakeholders.

A solution may be to move toward a single-touch environmental approvals approach for mining projects, as has been the case in Australia; projects there can now take just two years to start construction.

If the world is to decarbonize, it’s going to need a lot more mining and metals projects, and soon. Developing them in a sustainable way with all stakeholders - including the regulatory authorities - working towards the same goal is going to be critical.

Otherwise governments are going to suddenly find that their supply chains remain reliant on less friendly nations - as has been seen with the unfolding energy crisis in Europe following the invasion of Ukraine by Russia - going forward.

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